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I think I've made a boob

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Hello all,
I think I might have made a boob, if yes then i want to rectify.
I have been a professional chef since 2014. Since my initial internship, i became a type of freelance chef for various health clubs. Becuase of this job i was self employed ofcourse. So how i worked was I gave invoices at the end of the week or month to to clubs i worked for, and then do SA at the end of year.
But, I start my own takeway shop in June last year. [edit: take away business is LTD co.]
I never taken any money out of the business because after all monthly bills and rent there was not much left. But after it built up  and so in May 2019 i took out £13,500 as salary. But i did this by issuing a invoice to my takeway business.

I thought this was a easy way of doing it, but speaking with my brothers in law he says its not right and i could get fined as it looks like im not paying the proper tax. This is never my intention 

I don't want to do this wrong. If its wrong i want to rectify. I have never done anything wrong financially in my life.
Can anyone help?

Thank you

 

Replies (41)

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By bettybobbymeggie
22nd Oct 2020 20:31

Aitskunk wrote:
Can anyone help?

Yes, you need to get paid advice from an accountant.

Thanks (1)
Replying to bettybobbymeggie:
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By Aitskunk
22nd Oct 2020 21:01

Yes ofcourse, I am looking for one because my first year end of accounts will soon be due to be filed.
I was just hoping its not too late to rectify

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By the_drookit_dug
22nd Oct 2020 20:44

No, you shouldn't be invoicing yourself. I assume you're operating as an unincorporated sole trader drawing up accounts to 5 April each year?

Have you submitted your 2019/20 tax return yet? If so, just amend it. If not, then there's no issue.

And follow the advice above re getting an accountant :-)

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Replying to the_drookit_dug:
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By Aitskunk
22nd Oct 2020 21:03

Yes I know , I should have done my research beforehand. But at the time its just seems like a straight-forward option.

Yes as a sole trader i do my SA to 5th April. Not yet submitted for 19/20.

So as long as i declare in my personal SA for 19/20 its ok?

Thank you

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Replying to Aitskunk:
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By the_drookit_dug
22nd Oct 2020 21:35

Yes, you're fine. The amounts you withdraw for yourself (called drawings - you don't need to prepare an invoice for these amounts, but should keep records of what you've taken) should be excluded from your calculation of taxable profits.

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Replying to the_drookit_dug:
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By Aitskunk
23rd Oct 2020 00:13

Ah no, reading my post once again, I needed to say my takeway is a LTD business! I originally thought i said it.

It’s not going to be that straight forward is it....

To be honest I didn’t think so. Because last few days I’ve been reading online, and everything suggested it’s not right how I did it

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By paulhammett
22nd Oct 2020 23:00

But as others have said, do get an accountant who can make sure that the calculation of your taxable profit is correct.

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RLI
By lionofludesch
22nd Oct 2020 23:19

Just checking - you're not operating as a limited company, are you?

Thanks (1)
Replying to lionofludesch:
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By Aitskunk
23rd Oct 2020 00:16

The takeaway is a limited business yes, I am the only director.

I realise I didn’t say in my post. Soon as I saw your reply, the penny dropped and I knew it changed everything..

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Replying to Aitskunk:
RLI
By lionofludesch
23rd Oct 2020 05:52

[Sigh]

Thanks (0)
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By Cheshire
23rd Oct 2020 07:03

Aitskunk wrote:

Hello all,
I think I might have made a boob, if yes then i want to rectify.
I have been a professional chef since 2014. Since my initial internship, i became a type of freelance chef for various health clubs. Becuase of this job i was self employed ofcourse. So how i worked was I gave invoices at the end of the week or month to to clubs i worked for, and then do SA at the end of year.
But, I start my own takeway shop in June last year. 
I never taken any money out of the business because after all monthly bills and rent there was not much left. But after it built up  and so in May 2019 i took out £13,500 as salary. But i did this by issuing a invoice to my takeway business.

I thought this was a easy way of doing it, but speaking with my brothers in law he says its not right and i could get fined as it looks like im not paying the proper tax. This is never my intention 

I don't want to do this wrong. If its wrong i want to rectify. I have never done anything wrong financially in my life.
Can anyone help?

Thank you

 

Your dates don't add up, I presume you mean in May 2020.

You are in a mess aren't you. Always get an Accountant involved BEFORE you do anything. Tax planning, The key is in the word. Mise en place. Now all you can expect is damage limitation. get an Accountant immediately, don't waste more time researching how to DIY, as Accountants takes years to train! Longer than chefs.

Are you VAT registered? Should you be?

Do you have staff? Run a payroll?

Cash business. Hope you have good records.

Thanks (2)
Replying to Cheshire:
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By Aitskunk
23rd Oct 2020 10:10

Yes May 2020.

Yes accountant is my next first priority.

Not VAT registers as turnover is less than threshold

No official staff at the moment, my brilliant son helps with taking in orders and prep. But none on payroll

These days its more touch card payments and phone payments!

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By SXGuy
23rd Oct 2020 07:24

1) you started a take away shop last June but you invoiced it in May 19? Doesn't make sense.

2) you can't invoice for wages

3) your self employed, the money you receive IS your wages.

4) your take away business is a Ltd company? You need an accountant

5) pay for an accountant.

Thanks (1)
Replying to SXGuy:
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By Aitskunk
23rd Oct 2020 10:13

1) No the invoice was it May 2020
2) I see that now
3) Yes when i took the money out, it was for my wages for cooking. But now i understand its not the correct way.
4) Yes this is my priority

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By Paul Crowley
23rd Oct 2020 08:21

It is FRIDAY everybody!
Not me with this though

EDIT
If it was genuine then the #BEKIND is working

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By the_drookit_dug
23rd Oct 2020 08:34

Well, irrespective of whether it's May 19 or May 20, Limited Co or Sole Trader, the good news for the OP is that it can all be sorted fairly easily.

But get an accountant to do it.

Thanks (1)
Replying to the_drookit_dug:
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By Aitskunk
23rd Oct 2020 10:14

Yes to be clear,
Business start was in June 2019, My payment was in May 2020.

As a freelance chef i am self employed. But the takeaway business is LTD

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By Duggimon
23rd Oct 2020 08:57

You can't afford to not get an accountant, you could end up with way more than you can afford in tax bills and penalties if you don't get everything sorted out ASAP.

Fortunately it's not too late to avoid the real problems that may have accrued, though you would have been better off seeking professional advice as soon as you decided to open your shop, before setting up the company.

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Replying to Duggimon:
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By Tax Dragon
23rd Oct 2020 09:09

If Sift wants to reach out to (help) the public, it should abandon its "have an interest in tax or accounting issues? Post your query on Any Answers" message and replace it with what you say here. "An accountant could save you money. Seek professional advice at the outset."

OP, you'll be worse off than you would have been had you hired an accountant earlier; but if you don't hire one now, your costs will only escalate.

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By I'msorryIhaven'taclue
23rd Oct 2020 09:18

OP, you could try UKBF (UK Business Forum) which is a sister-site of Accountingweb. There you'll find plenty of accountants positively jostling with each other for your business. Plenty of free advice on offer too.

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
23rd Oct 2020 09:45

Hi Aitskunk,

I hope you have got the message in a polite and constructive way that when it comes to tax affairs, your first port of call should be a professional adviser. If you're hoping to rely on advice from an internet forum, you're unlikely to get a swift, unambiguous answer to your questions - or practical help at actually implementing it and dealing with HMRC.

I'd like to thank all the accountants who have taken the time to point this out to you and to offer a bit of reassurance that your difficulties can be resolved without too much anguish.

To answer the points raised above by Tax Dragon and I'm Sorry... AccountingWEB was not designed as a platform for free accountancy advice and we do not advertise that in any way. That said, we don't think it's appropriate to chase anyone who comes in here with an accountancy-related question away with digital pitchforks and burning torches. Our sister site UKBF is more suitable for some of these queries, but getting a broad view of tax and accounting challenges in real life doesn't hurt any of the people on this forum either. And if you don't think it's worth bothering with, then let others do it.

I'm Sorry's is also missing an important point about these exchanges. If you see someone who might need accountancy services, there is nothing to stop you letting them know that this is the sort of work you regularly do as long as it's relevant to their query. The private messaging tool can be used for this purpose too.

The moderators will draw the line, however, if the self-promotion becomes blatant and unrelated to the specific discussions.

Thanks (1)
Replying to John Stokdyk:
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By I'msorryIhaven'taclue
23rd Oct 2020 10:21

John Stokdyk wrote:

I'm Sorry's is also missing an important point about these exchanges. If you see someone who might need accountancy services, there is nothing to stop you letting them know that this is the sort of work you regularly do as long as it's relevant to their query. The private messaging tool can be used for this purpose too.

The moderators will draw the line, however, if the self-promotion becomes blatant and unrelated to the specific discussions.


Gosh, JS, I honestly didn't know holding yourself out to the public was allowed on Aweb. If I understand correctly, you're saying:
If you see anyone in need of an accountant it's acceptable to put your best foot forward and offer your own services;
Such self-promotion is not confined to the thread, but can also be carried out by private message;
Such self-promotion must be subtle rather than blatant.
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Replying to I'msorryIhaven'taclue:
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By Tax Dragon
23rd Oct 2020 10:43

I'msorryIhaven'taclue wrote:

Such self-promotion must be subtle rather than blatant.

I have a form of words for you, I'msorry:

An accountant could save you money. Ideally, you should have sought professional advice at the outset. You'll now be worse off than you would have been had you hired an accountant earlier; but if you don't hire one now, your costs will only escalate.

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Replying to Tax Dragon:
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By Tax Dragon
23rd Oct 2020 10:45

(You might need to add a PS that you are an accountant. Once upon a time, that would have been obvious - you were on Aweb after all. These days, the PS is probably needed.)

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Replying to Tax Dragon:
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By I'msorryIhaven'taclue
23rd Oct 2020 11:09

Tax Dragon wrote:

(You might need to add a PS that you are an accountant. Once upon a time, that would have been obvious - you were on Aweb after all. These days, the PS is probably needed.)


Thank you TD, I must remember to mention that in my PM to the OP :)
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Replying to Tax Dragon:
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By I'msorryIhaven'taclue
23rd Oct 2020 11:11

Tax Dragon wrote:

An accountant could save you money. Ideally, you should have sought professional advice at the outset. You'll now be worse off than you would have been had you hired an accountant earlier; but if you don't hire one now, your costs will only escalate.

Unashamedly blatant and completely lacking in subtlety, Tax Dragon.

You need a less obvious approach:

This will probably, although not necessarily definitely, be your very last but one chance to invest in hiring a suitable accountant such as myself; on the understanding that the more you spend the more you might possibly save.

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Replying to I'msorryIhaven'taclue:
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By Tax Dragon
23rd Oct 2020 11:16

I'msorryIhaven'taclue wrote:

Tax Dragon wrote:

An accountant could save you money. Ideally, you should have sought professional advice at the outset. You'll now be worse off than you would have been had you hired an accountant earlier; but if you don't hire one now, your costs will only escalate.

Unashamedly blatant and completely lacking in subtlety, Tax Dragon.

You need a less obvious approach:

This will probably, although not necessarily definitely, be your very last but one chance to invest in hiring a suitable accountant such as myself; on the understanding that the more you spend the more you might possibly save.

Nice touch on the fees. But it commits you: you are fessing up to being an accountant at the start.

My way, if you want the business, you can add the PS; if you don't, don't.

I'm sure if we worked together we could come up with something good.

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Replying to Tax Dragon:
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By I'msorryIhaven'taclue
23rd Oct 2020 11:33

Tax Dragon wrote:

I'm sure if we worked together we could come up with something good.


A standard (non-blatant) strap-line with which to tout for business on A-web? Just lIke they do on UKBF: Your Cheapest Accountant; Your cheapest Online Accountant; We're so Cheap we Pay You Accountants. What a cunning plan!

On a serious note, the accountants who dispense free advice on that [UKBF] site each have disclaimers; which I suppose is needed on Aweb if advising Joe Public directly is to be encouraged.

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Replying to I'msorryIhaven'taclue:
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By Tax Dragon
23rd Oct 2020 12:16

I'msorryIhaven'taclue wrote:

On a serious note, the accountants who dispense free advice on that [UKBF] site each have disclaimers; which I suppose is needed on Aweb if advising Joe Public directly is to be encouraged.

And on that same serious note, one might presume that the reason the Aweb forum doesn't do that is that it was designed for accountants. Even if that has evolved (per John) to be a forum for discussing tax and accounting (and related) issues for all and sundry with any interest in those topics, it is not an appropriate place to come for advice on a personal situation.

To point that out is not to wield a digital pitchfork - though I don't disagree with John's comments about the aggression that does get exhibited in here.

Happily, I see no such on this particular thread. I guess the question isn't 'seen' as too bad (though the question, which translates fairly readily to "have I left it too late to hire an accountant?" betrays some screwed-up thinking).

Aaaannyway... we're back in Aweb's navel. I'm off - till next time, ciao.

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Replying to Tax Dragon:
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By I'msorryIhaven'taclue
23rd Oct 2020 13:04

Tax Dragon wrote:

(..the question, which translates fairly readily to "have I left it too late to hire an accountant?" betrays some screwed-up thinking).


Well if he has left it too late that would be his second mistake. In which event his post title would translate even more readily into I Think I've Made a Pair of Boobs[***].
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Replying to I'msorryIhaven'taclue:
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By Tax Dragon
23rd Oct 2020 11:19

Apologies, I made a coffee half way through my post and have accidentally recorded your original! (I feel like I have treated you like an anonymous OP... maybe now you can see it from the other side?... what's it like?... is it (am I) as bad as they say?)

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Replying to Tax Dragon:
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By I'msorryIhaven'taclue
23rd Oct 2020 11:36

No need to apologise TD, and please don't trouble yourself to perform an edit as that would only lead to pink triplicate copy.

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
23rd Oct 2020 17:52

I had a tea-related snorting incident when I saw the "pair of..." comment.

I was wondering why this thread was trending so high on and guessed that the ever so slightly salacious headline was attracting some interest, but had managed to evade the pink meanies of our automated spam filter.

Though I sense some satirical intent in the latter part of the discussion, you've essentially go my point.

Come to think of it, if you all started posting comments about how available you were to advise on a paid basis, I bet the hit-and-run advice seekers would disappear very quickly.

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Replying to John Stokdyk:
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By Paul Crowley
23rd Oct 2020 18:28

1 Responders did not join looking to sell services
2 OP gave up when no more fish to hook
3 Abandoned threads do sometimes lead a life of their own, where is the harm in that?

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Replying to Paul Crowley:
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By Aitskunk
23rd Oct 2020 19:05

I'm sad to hear you think like this

"trying to hook fish", to make me sounds like a con artist?

If 'gave up' means enlisting an accountant who messaged me, then yes.

I also note that literally the only unhelpful troll comment in the whole post is yours. Ill refrain from saying your posting show your character.

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Replying to Aitskunk:
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By Paul Crowley
24th Oct 2020 16:15

So abandoned thread was correct.
And any subsequent 'helpers' were wasting their time.

I thought Trolls hung around bridging software

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Replying to Paul Crowley:
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By Aitskunk
24th Oct 2020 20:32

I still don’t understand the point sorry.

I replied to almost all comments and answered follow up questions

Most people agree that it’s anjob for an accountant to sort out.

Would you prefer I keep pestering?

I’ll happily take all the free ideas you have!

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Replying to Paul Crowley:
RLI
By lionofludesch
23rd Oct 2020 19:42

Bit harsh, Paul.

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Replying to Paul Crowley:
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By I'msorryIhaven'taclue
24th Oct 2020 10:18

Well now we know the real reason why the OP appeared to give up was because he got engaged, and to one of our very own no less. Which might go some way to explaining why threads often appear to be abandoned by their OPs early-doors.

Well done JS for explaining the Aweb self-promotion guidelines; and thank you OP for coming back to tell us your outcome. I do hope matters are soon resolved for you.

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Replying to I'msorryIhaven'taclue:
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By Cheshire
24th Oct 2020 12:14

I will hazard a guess it was by someone who never posts to help others out.

Cynic- moi?!

Does make a nice change though to have a FL business owner not aggressively throwing his toys out of the pram at the earliest opp.

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Replying to Cheshire:
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By I'msorryIhaven'taclue
24th Oct 2020 15:18

Heavens, you mean JS? Surely not!

Rattles and prams? I guess we'd most of us here send the suicide rate soaring if we worked for the Citizens' Advice Bureau.

Note to self: must improve on people skills.

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