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Inoff the Red

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About Inoff the Red

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    Senior Member, Raffle Sponsor 2013

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  1. Inoff the Red

    Capital introduced - advice

    The real protection of trading through a limited company rather than as a sole trader/partnership is that if you make a mistake on a job and a tree drops on someones house any claim would be against the limited company and not against you personally. With regards to VAT, at present the UK has the highest VAT registration limit (£85k) in the EU where the limit is significantly lower (Germany €10,000, France €12,000). This is perceived to give UK businesses an unfair advantage (dubious)while simultaneously depriving the EU of VAT revenue (probably the main reason for future change). In the event that Brexit is thwarted or we are tied into the EU, then brace yourself for the VAT registration limit to come down to levels consistent with other EU countries.
  2. Inoff the Red

    Capital introduced - advice

    Obviously if your company is a bit wobbly then you wouldn't put money in, but then if that was the case you probably wouldn't get a lease anyway....at least not without a PG that puts you in the same place regarding potential loss.
  3. Inoff the Red

    Capital introduced - advice

    Well, I could have an interesting debate with that accountant about his view of the tax efficiency of leasing rather than buying with own resources. Was he getting a commission from the finance company for introductions? If there is no other option than leasing is a way of getting stuff but don't forget that the leasing companies factor their costs and profit into the lease payments so there is a cost compared with using own funds.
  4. Inoff the Red

    Capital introduced - advice

    A few comments:- 1. I don't wish to appear to be pedantic but repayment of a debt is a cash flow issue NOT a profit and loss account issue. This means that the repayment of the directors loan (in your example) would be from profits which would have been subject to corporation tax or from a bank loan or overdraft. The impact of AIA on the tax is a separate issue but to suggest that the repayment of a company debt before taking earnings in excess of the personal allowance as part of a tax planning exercise is misleading . It is worth noting that the effects of introducing a loan into a limited company is the same as using personal funds to buy business assets as a sole trader/partnership. Those loans can be repaid whenever the respective business cash flow allows. Repayment of a loan is not income for the purposes of tax. 2. One needs to be careful about claiming a proportion of domestic costs as a business expense. At present any profit on the sale of your principle residence escapes capital gains tax. If you are in the habit of claiming a percentage of household costs based on a room being designated as an office and work out percentage of floor area etc and claiming a portion of council tax, mortgage interest etc, then you run the risk of having that part of your residence being classed as business premises when sold and that percentage of the gain could be deemed to be subject to capital gains tax. It is safer to make a round sum claim for "use of home as office" based on the HMRC flat rate for utilities (which depends on the number of hours at home :- up to 50 hours per month claim £10 per month 51 to 100 hours per month claim £18 per month 100 hours plus per month claim £26 per month. The above does not cover telephone and internet costs, the business element of which can be claimed. You can claim more if you can justify it but I do not recommend specifying part of your home as an office and claiming mortgage interest, council tax, property repairs, new carpets etc. 3. VAT The ability to go back a few years to recover vat on assets relates to assets purchased that are still in use within the business. The issue to bear in mind however is how those purchases were treated when originally purchased. If the full cost, including associated vat was claimed under the AIA scheme then if the vat is subsequently reclaimed then I suspect that capital allowance claims may need to be revisited because the effective cost of the asset would have reduced (by the amount of VAT subsequently claimed). This could reduce the net benefit of the vat reclaim.
  5. Inoff the Red

    Capital introduced - advice

    I suggest getting your numbers together (and I mean summarised in a meaningful way, not just fill a carrier bag full of invoices and receipts) and then going to see the chap that will be doing your books from April and ask for his advice in preparing your 2018 tax return. It should not cost you much and he will need the info for when he starts doing your accounts anyway. It is dangerous giving advice on one aspect of a business without knowing the full picture. ,
  6. Inoff the Red

    Tax return

    Interesting. Making Tax Digital for VAT goes live in April 2019 but I understand that MTD for income tax will not go live until April 2020 at the earliest. Have you volunteered to be one of the guinea pigs that trials it early? I was a little confused by your comment that you have set up your first payment on account for July 2019. The first payment on account is usually made on 31 January 2019 (together with any underpayment in respect of the 2018 tax year) with the second payment on account being made in July.
  7. Inoff the Red

    Making the news today....

    It is becoming increasingly apparent that Appeaser Theresa has been planning this surrender from the start.
  8. Inoff the Red

    selling grounds / garden contracts

    Subcontracting would be one option and subject to the subbie doing the job properly so there is no reputational risk and it was done on a pay when paid basis would control finances. Defaulting on a contract (depending on the terms of that contract) opens the risk of claim for breach so I would be a bit nervous about that.
  9. Actually, if the employees employment is scheduled to last a month or more then you are obliged to provide a written statement of employment particulars. See here:- https://www.gov.uk/employment-contracts-and-conditions/written-statement-of-employment-particulars Employing someone without having a contract of employment is a huge risk because of the almost inevitable uncertainty over terms covering, for example, holiday entitlement, sick pay, hours, duties and responsibilities, overtime, expenses etc etc etc.
  10. Inoff the Red

    selling grounds / garden contracts

    Can you actually sell the contracts without the clients consent? Is there anything in the contract that allows its sale or novation to a third party without the clients consent?
  11. Inoff the Red

    Arb consulting advice

    Dredik, I cannot comment on the technical stuff you need for your work but your experience of work "waves" is common with many small businesses and start ups. When looking at your workload what can help is to view it in terms of a pipeline. When you start up the pipeline is empty and you work hard to get to get some jobs in and breath a sigh of relief when they do as you can see some paying work in your pipeline. There is then a temptation to ease off working to fill the pipeline as focus shifts to working on the jobs and, as a consequence, the pipeline dries up and you experience the wave you described. The solution is not to stop on your marketing/work getting activities and to allocate time , even when busy, to trying to fill the pipeline. It is easier said than done but it does get easier as you become established and your client base expands and your reputation develops. Good luck with it
  12. Inoff the Red

    Arb consulting advice

    That is very true and it is the key to success and, as you say, it isn't easy. It sometimes helps to put yourself in the position of the person you are selling to and try and understand their position, motives and what is causing them stress and whether they have existing contacts for doing the job that you want to do. If you are a newcomer to the self employed lark, why would a customer choose you (an unknown quantity) over someone who they have worked with before because they may not want to take a risk on employing someone who may not deliver. An obvious way is to pitch your price below that of the competition but this is a dangerous practice as it is easy to reduce prices but it is hard to raise them later. Another way of attracting a customer is to offer something of value that does not necessarily reduce your margins. When I was in your position (albeit in a different sector so these may not be applicable but you may get the idea) I tried to avoid being the cheapest but would try and add value to the service in other ways. I would offer to hold meetings after 5pm or at week ends so they could concentrate on their day job before dealing with accounts and tax. I also offered a fixed price but with a right to discuss a revision (up or down) if the scope of the job changed significantly. Unlike many professionals that send out a bill for every phone call for ad hoc advice I told clients that they could phone at any time if they had a query or concern and that they would not get a bill for any calls as it was part of the service. Of all the things I tried, this was the one that really got peoples attention and from a personal perspective it adds little to the work load and experience has shown that knowing what clients are thinking of doing in advance actually makes my life easier in the long run because I don't have to spend time trying to unscramble some dodgy scheme or action suggested by a random bloke in a pub. If you put yourself in the shoes of your customer and see what you can do on a technical level or even a basic admin level that will make his life easier then you may find it to be an easier sell (although to start with you may need to discount your prices a little to get into the game). Good luck. Remember, as a self employed person there will be times when you only have to work half days......and it won't matter which 12 hours it is.
  13. Inoff the Red

    Recording Business Phone Calls

    Recording phone calls gives you a record of what was agreed between the parties but I am not sure how effective it would be if it ever came to a court case. It is always safer to get something in writing to/from the person that is going to pay the bill.
  14. Inoff the Red

    Credit card purchases self employed

    Have you told HMRC that you are self employed? Have they issued you with a UTR number (unique tax reference)? That notification usually comes with a leaflet advising what you need to do to manage your tax affairs. They also send out periodic reminders of self assessment deadlines. HMRC will expect you to know what the requirements are for filing tax returns etc. The HMRC web site does give some pointers if you search business start ups. If you get stuck or want a quick chat about what you need to do, send a PM with your questions and email address/mobil number and I will answer them. As for the "advice" given to you about business items purchased on your credit card, the suggestion that there is a restriction on what you can claim against tax if you only make minimum payments on your CC is absolute nonsense. If you buy a business item on a credit card you have incurred a liability, how you choose to discharge that liability is your decision and it does not affect what you can claim as a business expense. Using a credit card is just a different way of financing your business. You could have chosen to use a bank overdraft, HP or loan.

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