Clean It Up
UK Window Cleaning Forum => Window Cleaning Forum => Topic started by: drew86 on January 31, 2007, 02:50:47 pm
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Hi, can anyone tell me If I employ the services of a round builder Is the cost tax deductable,
Drew.
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are you VAT reg'd or not?
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no I am not vat reg,
Drew
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I don't see the relevance of being Vat registered or not and I would say it is a legitimate business expense.
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I was told by the Inland Revenue if you buy a round its not Tax Deductable as you are not buying anything but a good will gesture of clients ::)
Macc
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that seems strange to me .so if a customer gives you a quid tip as a goodwill gesture then that isnt taxable ;D
i thought you could claim the cost ,or perhaps roundbuilders can bill you for say 1 house = £10 which = 1/2 hours work .so thats 20 quid for hal;f hour .then you are paying for there time and not goodwill
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It gets better, if you sell some work you have to declare it >:(
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I was told by the Inland Revenue if you buy a round its not Tax Deductable as you are not buying anything but a good will gesture of clients ::)
Macc
So that means If I sell you part of my round I don't have to declare it as income?
Or if I set up a roundbuilding company then all my sales do not have to be declared for tax?
That doesn't make sense to me.
Modified to add - I posted this before reading your last post Macc!
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my accountant told me that the way it happens is.
you buy a round for £1000 and you cant claim it until you sell it , so if you sell it for £1500 then you have made £500 profit which is taxable
hope this makes sense
gary
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I would of thought Roundbuilders are charging for proffesional services that are 100% business use so can not see any difference between them and an accountants bill so 100% legit business expense.
Dave
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it must depend on how you are billed .
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Get them to bill you for time spent doing the work or even describe it as consultancy. Problem solved!! :)
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Yes i get a bill for an amount of money for time spent on my business. I give these all to my accountant, not had any come backs from her yet!
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I don't see the relevance of being Vat registered or not and I would say it is a legitimate business expense.
It is the "goodwill" problem. If you are VAT registered you can claim back tax on "goodwill" purchases. If you are not, then you can not. Goodwill is not tax deductable for a soul trader.
Now we all know that it is a profitable trade, the problem is it just looks like a loss on paper. It looks on paper as if you have bought nothing but a list of names, no contracts, and it is all based on goodwill.
Tax Evasion vs Tax Avoidance. There is a difference between these two. One is illegal, one is very legal.
To evade tax is illegal. So we must instead "avoid" tax.
This is my idea, see if it sounds OK to you lot.
Instead of buying a list of goodwill, the seller instead subs us the work for the first 6 months. This work is sub'd at 50% with the person subbing out the work getting their share in advance, you do this in return for the fact he is willing to transfer the list of names to you for £1 in 6 months time, all the money changes hands on the same day, it is just for 6 months he still owns it and you work it for him at a 50% charge.
Lets say he has £1000 of work to sell.
Instead of buying it for £3000 you actually buy it for £1 and sub the work from him for 6 months @ 50% and pay his share now.
This way you have not "bought" £3000 of goodwill. You have bought £1 of goodwill and worked for 50% of £6000. He has sold you goodwill for £1 and sub'd you work which he makes 50% of £6000 on.
It is avoidance, not evasion.
Anyway, thats my idea, does anyone think it sounds ok? You would obviously need to check with an accountant before doing it and probably the HMRC just incase it is counted as evasion.
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if you receive an invoice from roundbuilders for the work they have done then yes, this is a legitimate business expense and tax deductable.
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LOL! well better than being a fish monger but the hours are a bit naff.