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Accounting for Taxi Drivers

Accounting for Taxi Drivers

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Is accounting for taxi drivers any different than regular self-employed accounting?  I see a lot of 'specialist' accountancy websites specialising in providing services for taxi drivers... but what's the difference?
 
Thanks!!

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By Jdopus
10th Sep 2014 10:10

Cash Heavy

I've only dealt with a few taxi clients before.  There's nothing different on a legislation front other than being allowed to claim your car under AIA, however there are some patterns in the records.

For one, they'll all be very cash heavy businesses, secondly in my experience, unless they're working as part of a taxi company, most taxi drivers are going to have fairly bad records of their takings and expenses.  I suppose having some experience with other taxi clients can help if you're trying to piece together a set of accounts from incomplete information.  The only thing I can think of outside of that is if the websites you're talking about are offering bookkeeping software specifically aimed at taxi drivers to help them with keeping their records.

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Replying to lionofludesch:
By James Reeves
10th Sep 2014 11:05

AIA?

Jdopus wrote:

There's nothing different on a legislation front other than being allowed to claim your car under AIA

I thought the AIA was only allowed for purpose-built "Hackney Carriages" similar to those used in London and elsewhere. Surely "cars" are not allowable expenditure for AIA.

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Replying to Tim Vane:
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By Jdopus
10th Sep 2014 12:43

Black cabs

James Reeves wrote:

Jdopus wrote:

There's nothing different on a legislation front other than being allowed to claim your car under AIA

I thought the AIA was only allowed for purpose-built "Hackney Carriages" similar to those used in London and elsewhere. Surely "cars" are not allowable expenditure for AIA.

 

You're correct, I should have been more specific as I was thinking of black taxis, minicabs don't qualify.

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Replying to lionofludesch:
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By Euan MacLennan
10th Sep 2014 14:19

Odd terminology

Jdopus wrote:

I should have been more specific as I was thinking of black taxis, minicabs don't qualify.

This whole topic is a minefield of terminology.

There must be very few minicabs which are actually Minis.  Many minicabs - such as the MPVs driven round London by Addison Lee - are bigger than black cabs.  Indeed, black cabs don't have to be black to qualify, but black cars used as taxis still don't qualify.  And Hackney Carriages (or were they Hansom Cabs?) don't qualify because they are horse-drawn carriages.

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By The Innkeeper
10th Sep 2014 10:20

The specialist firms

are like sausage factories. There is a market price for taxi drivers which is very tight. If you do have a taxi driver I would strongly suggest that he has fee protection insurance as the risk of an enquiry is very high.

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Replying to lionofludesch:
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By Stalytax
12th Sep 2014 17:25

Sausage Factories

The Innkeeper wrote:
The specialist firms are like sausage factories.

I have a sausage factory as a client and they are nothing like accountants, believe me, though they do keep a good set of books.

Taxi drivers, on the other hand have appalling records, from my experience, and as a cash business, do attract HMRC attention as 'low hanging fruit'. They also have bumps which generate loss of earnings claims, for which I never once got paid.

 

 

 

 

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By A Counting House Limited
10th Sep 2014 10:48

What about mileage?

Thanks all - what about mileage? Any differences there?

 

Appreciate the info about fee protection insurance. Interesting to wonder whether it could be more trouble than it's worth!

 

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Portia profile image
By Portia Nina Levin
10th Sep 2014 14:26

Hackney carriages

I thought it had been established in a previous thread that hackney carriage did not mean a black cab style vehicle, necessarily, but referred to a vehicle to which a hackney plate had been affixed.

The fixing of the hackney plate alters the type of the vehicle that cannot be driven by an ordinary member of the public (it can only be driven by somebody licenced to drive a hackney carriage), and so ceases to be of a type commonly used as a private vehicle and becomes unsuitable for such use, and so ceases to be a car (as defined).

Maybe I dreamt it!

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Glenn Martin
By Glenn Martin
10th Sep 2014 15:01

Education

I have looked after quite a few taxi lads over the years. The reason you see firms specialising in them is that if you do a half decent job for them they tell their pals "down the rank" and you end up with a load of them.

The records tend to be poor so you have to educate to what records they need to keep.

you used to be able to buy "a taxi record book" from WH Smith for a few quid and basically they had a weekly page for income and expenses get them to fill that in and the annual summary at the back and they are relatively easy to do.

For expenses you can either use the fixed mileage rate or actual cost. Actual cost is more difficult as they either provide too many or not enough receipts to match their expenses.

you need to get the cost right against income as there is a strict ratio of fuel to income HMRC expect to see and you can fall foul of this if mileage records not up to scratch.

Fee protection cover is worth insisting on as this type of business attracts a lot of HMRC attention. You maybe set a fixed fee including PFP to apply to all you taxi lads.

I live in North East so we don't really have black cabs, a Toyota Avensis with an endless supply of Bollywood music seems to be the vehicle of choice. 

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By Cloudcounter
10th Sep 2014 15:27

Fuel to income ratio

Of course eveybody on the rank knows that HMRC are looking for a certain ratio of fuel to income. A few years ago someone came up with a jolly little wheeze - we won't claim for this £10 fuel payment, but then we won't have to declare the £70 odd income that it generates.  Caught on quite widely, as you'd expect.

So the chap from HMRC toddles down to the local council to look at the taxi's plating records.  Or asked the minicab drivers to produce service and MOT records for the year under enquiry and the previous one.  If the driver's figures were to be believed, then the cab must have been doing about 100 to the gallon!  When the missing petrol receipts came to light, the missing takings were evident too.

That raked in quite a bit of extra tax, as you can imagine.

 

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By cbp99
10th Sep 2014 16:05

Hackney carriages

This thread may be of interest:

https://www.accountingweb.co.uk/anyanswers/question/hackney-carriage 

EDIT or at least it would be if the link went to the right place.Seems that copying the link into a new browser window works better than clicking on the link. If anyone knows why that might be please let me know.

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Portia profile image
By Portia Nina Levin
10th Sep 2014 16:20

This thread

Was the one I was thinking of: https://www.accountingweb.co.uk/anyanswers/question/aia-taxis-other-lond... And my link works!

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By RobertG
10th Sep 2014 16:35

LIke any  business, HMRC will

LIke any  business, HMRC will have parameters they will look for and it is possible to source valuable information on those.  It is also important to know how your taxi driver client should be performing as any surpression of takings or expenses can be viewed as money laundering.

As has been said the mileage on a vehicle can easily be identified and then HMRC will have a model to work out `engaged` mileage in the area the taxi driver operates. 

We have a large section of taxi drivers from various areas including London and an investigation is very rare. There are easy to keep taxi driver accounts books available.

Tax drivers are great talkers and if you do a good  job you will get referrals not just taxi drivers but anyone who gets in the cab moaning about their accountant. Our greatest referral was to a well known television and film actress who then referred us to other `names`and so on.- Carry on Cabbie!

 

 

 

 

 

 

 

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By marks
10th Sep 2014 20:44

I have a few taxi drivers

I give them a simple excel spreadsheet to complete by week where they detail

1. Fairs taken

2. Tips received

3. Car rental costs

4. Fuel costs

5. Any other business costs eg taxi licence, car wash, etc.

 

All my taxi drivers are part of a larger firm employed on a self employed basis so they rent the car from the company.

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By ArsalanShah
10th Sep 2014 23:42

We have 35+

clients who are in this business and numbers are still increasing.Based on my experience,there are few bits I would like to share:

Never had a single enquiry from HMRC for any client

Most clients have worst record keeping

Cabbies are small fee clients BUT market size is bigger as this weighs up from the referrals I get from almost each client

Hope this helps.

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By paddy55
13th Sep 2014 03:13

Taxis

I have written an article for taxi owners and taxi drivers for my website. But it is for Australian conditions.

http://members.iinet.net.au/~patrick6/Tax%20for%20Taxi-drivers.html 

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By Malcolm Ridler
13th Sep 2014 10:43

Accounting for Taxi Drivers

I am based in Bristol and cope with four taxi companies as well as the owner drivers (All Private Hire).

Records kept by drivers are dreadful, but a computerized booking system kept by the company they work for should give a day by day breakdown of number of journeys, mileage and fares.

Almost all Cab firms have these systems in place and HMRC are happy to accept the figures from these printouts, even though I have never been asked to produce them for any of my clients.

Also a comment about AIA; a private hire driver that drives a plated saloon car or MPV is able to claim capital allowances.

 

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By Malcolm Ridler
13th Sep 2014 10:52

Accounting for Taxi Drivers

Sorry!

 

Further comment:

Private hire is given a job at point A, from which he drives from his location to pick up point B and then drops the passenger at drop off point C.

He then receives another job at pick up point D.

Of all the above mileage the only working mileage is between points B and C.

Have explained this to HMRC staff and they accept this as true for private hire drivers

 

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By johnrosa
17th Jan 2015 06:01

nice

helpful and insightful while being straight forward and to the point. Thanks for the posting.infocabs

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By stroake
30th Jul 2017 10:41

http://www.accaglobal.com/uk/en/technical-activities/technical-resources...

This puts an end to the AIA debate...only for black cabs. Kind of makes sense as a saloon car or mpv can be used for personal and is not specialist, industry specific vehicle whereas a black cabbie would be reluctant to use his cab as a family run-around.

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By SteveHa
31st Jul 2017 09:12

Back in my Revenue days the compliance officer in the local office would frequently go around to council licensing for his next batch of enquiries.

Taxi drivers were such easy pickings.

Not so sure they still do that, now. What, with the loss of local offices and competent staff.

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Replying to SteveHa:
RLI
By lionofludesch
31st Jul 2017 09:20

SteLacca wrote:
What, with the loss of local offices and competent staff.

Such as yourself, Ste ?

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Replying to lionofludesch:
By SteveHa
31st Jul 2017 10:03

Possibly, though I left HMRC on health grounds rather than any overarching reasons of crapiness.

And how did you know I was a local office?

The problem is, as good staff leave, there's no-one able to fill the void, and the newer staff simply aren't properly trained.

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