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Sam
Sam, Accountant
Category: UK Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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I am self employed but work as a contractor for one company

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I am self employed but work as a contractor for one company (the HMRC employment status indicator states self employed). I have been doing this since being made redundant in 2010. I filled my first tax return in January 2012. My accounts are fairly simple as I am paid a daily rate for my work and expenses are paid separately (mostly stationary, mileage and costs for overnight stays when working away). As these were paid as expenses I did not include these in income (counting only the money 'earned') but didn't claim any other business expenses. Is this correct/permissible? I have started to worry that I needed to declare all the expenses paid and then somehow claim them back?
Submitted: 2 years ago.
Category: UK Tax
Expert:  Sam replied 2 years ago.

Hi

 

Thanks for your question

 

You should have declared the gross amount paid - so daily rate plus expenses and then claimed the expenses arises, to form a true net position.

 

However, as the end result is the same, there maybe is no harm done, unless you should be registered for VAT, and then this does make a huge difference, as the need to be VAT registered is based on your turnover, so you should consider whether this would put you above £77,000

But I would from now on do it the correct way.And is VAT is an issue, then you will need to rectify this, and your self assessment income and expenditure.

 

 

I also have a small concern that as you seem to just work for one contractor that maybe you should have been paid as an employee and not under CIS. But if you have satisfied yourself that you are in fact self employed, and feel sure that this status is correct, inspite of this factor, then all you need to do is address the VAT issue and make sure you declare the income and expenditure correctly from now on.

 

I have added a link here from the Business Link website - (affiliated now with HMRC) that addresses the issue of whether you should be CIS or PAYE.

 

http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1080751234&type=RESOURCES

 

Thanks

 

Sam

 

 

 

 

Customer: replied 2 years ago.
Sorry I don't work in construction but in events management. Does this make a difference? Also should I write to HMRC with the expenses in and out for last year just to be clear? I don't want HMRC to have any grounds to penalise me!
Expert:  Sam replied 2 years ago.

Hi

 

Thanks for your question

 

Sorry the word contractor usually means within the building industry, so I do apologise for any confusion


Then you are looking like you should be an employee as you work for just one business. And it would not hurt to write to HMRC to state that your annual income was £x and expenses £x but as these are paid back to you, and covered fully, you did not realise that you needed to declare it as total income, less expenses.


But whilst writing I would get clarification that HMRC can view you as a self employed individual, as it does not seem clear cut that you are in fact self employed, as you do not appear to be able to make a loss, are paid all your expenses, so are not even out of pocket with overheads, do not advertise yourself for other businesses to use your skills, which all lean to being employed.

 

Thanks

 

Sam

 

 

 

 

 

 

Sam, Accountant
Category: UK Tax
Satisfied Customers: 12862
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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