Again, I've used them going on price and when submitting returns works you really feel like you have value for money.
When it doesn't work - CT600's seem to be a problem for me - the stress and time it takes to resolve it have forced me to just bite the bullet and buy taxcalc. Great interface, easy to use and works everytime (thus far). Now my client base is growing I can justify the cost - a couple of months a go however and I would have stuck with wasting hours with ftax. You have to ask what's value for money and what can you afford.
It helps a lot - many thanks to both posters. I think I am using the terms "lease" and "HP" far too liberally and it has confused my reading of this subject.
The stupid thing is, I already knew all this but thought I would just revisit today to keep up my CPD. One step forward two steps back!
Sorry BKD, the point I was trying to make is that the definition of a finance / operating lease is a matter of judgement.
I am then interested, purely for arguments sake, whether or not a HP arrangement where you have the option to buy (and the material facts of this individual arrangement indicates a finance lease) would qualify for capital allowances?
I thought so, you state it is so, but the above section of the manual states:
When a person buys an asset under a hire purchase type contract the person cannot satisfy the ownership condition CA23010 that has to be satisfied for the expenditure to be qualifying expenditure for PMA while the payments are being made. That is because ownership does not pass until the last payment is made.
However, it then states:
The legislation in Section 67 treats the person making the payments under the contract as the owner of the asset as soon as that person is entitled to the benefit of the contract.
My reading of the two paragraphs is that they are saying the opposite of each other. It then states:
For example, a contract that contains an option for the lessee to buy the asset for market price at the end would not be treated as a finance lease by the lessee. This means that the lessee is not treated as the owner of the asset until they actually buy the asset and so it cannot get PMA until it pays the option price.
So, is it how the individual elects to treat the lease (finance / operating) that is the deciding factor?
The danger is in confusing the two terms. If an item of expenditure has duality of purpose, it is disallowed; full stop.
When the legislation says this:
(2)If an expense is incurred for more than one purpose, this section does not prohibit a deduction for any identifiable part or identifiable proportion of the expense which is incurred wholly and exclusively for the purposes of the trade.
That I find confusing.
Basically, if the expense has a business and private element you can claim for the business element. The problem arises when your client thinks there is a business element (subsitence etc) when you know there isn't.
And yes, I suppose apportioning the costs involves a bit of accounting magic fed by as much information as you can get.
I used to think that bookkeeping was something anyone could do. Just input the data.
However, my view has changed fundamentally.
Without understanding the dynamics of the relationship it might help your point if you put your views bluntly to the director followed up by a checklist of core duties a bookkeeper must be competent of. For example:
Inputting technical accounting journalsProperly maintaining purchase and sales ledger journalsReconciliation of bank and credit card accountsReconciliation of the record on sage and the physical records and dillgent filingWould he feel comfortable during a VAT inspection with the inspector looking at his work with a large mircoscope? Confidence in the accounts is key for the business and for compliance.
@ John Paris So if you go on a website like adultwork.com with independant escorts - thousands of them - you can tell me for a fact they are registered with HMRC?
I would suspect that if they are advertising then HMRC have probably traced them and they are probably registered, or will be once HMRC catch up with them.
Given HMRC's trawling of ebay I would be amazing if other potentially profitable sites haven't also been trawled, wouldn't you ?
As for "facts", I wouldn't know, perhaps a request to HMRC under the freedom of information act as to how many escorts are registered taxpayers might be interesting ?
I would just be very skeptical that HMRC have the resources to do this.
When referring to the "former" I was referring to this sentance, the sentance just before!! :
"There are some women (and men for that matter) who sell sex and some who sell nothing more then genuine companionship to events etc"
Secondly, yes, the nature of the business does make me automatically assume that people who operate within it would not complete tax returns. I am not bigoted in anyway and again, I had a very close family member who was an escort. I know a lot people in this industry and whilst they are LARGELY good and upstanding members of the community they are sometimes either ignorant of the need to complete a tax return, make the assumption themselves that because of the questions they have themselves of legality of what they do they should not complete a tax return or yes, shock horror, don't want to complete a tax return because they just don't want to. Because sometimes they fund drug habbits. Because sometimes they are claiming benefits at the same time. Would I make moral judgements on such people? Given the people I know who are like this and their awful backgrounds I 100% would not.
Tell me, as a proportion of all escorts nationally, how many in your honest opinion complete tax returns? I would dare say not more than 10% if that.
Trust me - my views are not based on assumptions in the slightest. Take off your rose tinted glasses.
@ John Paris So if you go on a website like adultwork.com with independant escorts - thousands of them - you can tell me for a fact they are registered with HMRC?
Sorry, it's the fault of us bigoted unapproachable accountants that many of these people don't do a tax return. Nevermind the social reality to their situations.
My answers
When it works it's great
Again, I've used them going on price and when submitting returns works you really feel like you have value for money.
When it doesn't work - CT600's seem to be a problem for me - the stress and time it takes to resolve it have forced me to just bite the bullet and buy taxcalc. Great interface, easy to use and works everytime (thus far). Now my client base is growing I can justify the cost - a couple of months a go however and I would have stuck with wasting hours with ftax. You have to ask what's value for money and what can you afford.
Ah
It helps a lot - many thanks to both posters. I think I am using the terms "lease" and "HP" far too liberally and it has confused my reading of this subject.
The stupid thing is, I already knew all this but thought I would just revisit today to keep up my CPD. One step forward two steps back!
Well.....
Sorry BKD, the point I was trying to make is that the definition of a finance / operating lease is a matter of judgement.
I am then interested, purely for arguments sake, whether or not a HP arrangement where you have the option to buy (and the material facts of this individual arrangement indicates a finance lease) would qualify for capital allowances?
I thought so, you state it is so, but the above section of the manual states:
When a person buys an asset under a hire purchase type contract the person cannot satisfy the ownership condition CA23010 that has to be satisfied for the expenditure to be qualifying expenditure for PMA while the payments are being made. That is because ownership does not pass until the last payment is made.
However, it then states:
The legislation in Section 67 treats the person making the payments under the contract as the owner of the asset as soon as that person is entitled to the benefit of the contract.
My reading of the two paragraphs is that they are saying the opposite of each other. It then states:
For example, a contract that contains an option for the lessee to buy the asset for market price at the end would not be treated as a finance lease by the lessee. This means that the lessee is not treated as the owner of the asset until they actually buy the asset and so it cannot get PMA until it pays the option price.
So, is it how the individual elects to treat the lease (finance / operating) that is the deciding factor?
I can see the confusion too
For me it's when people say this:
SteveOH PM | Mon, 05/03/2012 - 00:13 | Permalink
The danger is in confusing the two terms. If an item of expenditure has duality of purpose, it is disallowed; full stop.
When the legislation says this:
(2)If an expense is incurred for more than one purpose, this section does not prohibit a deduction for any identifiable part or identifiable proportion of the expense which is incurred wholly and exclusively for the purposes of the trade.
That I find confusing.
Basically, if the expense has a business and private element you can claim for the business element. The problem arises when your client thinks there is a business element (subsitence etc) when you know there isn't.
And yes, I suppose apportioning the costs involves a bit of accounting magic fed by as much information as you can get.
Technical knowledge
I used to think that bookkeeping was something anyone could do. Just input the data.
However, my view has changed fundamentally.
Without understanding the dynamics of the relationship it might help your point if you put your views bluntly to the director followed up by a checklist of core duties a bookkeeper must be competent of. For example:
Inputting technical accounting journalsProperly maintaining purchase and sales ledger journalsReconciliation of bank and credit card accountsReconciliation of the record on sage and the physical records and dillgent filingWould he feel comfortable during a VAT inspection with the inspector looking at his work with a large mircoscope? Confidence in the accounts is key for the business and for compliance.
Etc etc
If he still insists then what more can you do?
Good luck!
Do HMRC have resources for this?
I would just be very skeptical that HMRC have the resources to do this.
Chatman, really?
When referring to the "former" I was referring to this sentance, the sentance just before!! :
"There are some women (and men for that matter) who sell sex and some who sell nothing more then genuine companionship to events etc"
Secondly, yes, the nature of the business does make me automatically assume that people who operate within it would not complete tax returns. I am not bigoted in anyway and again, I had a very close family member who was an escort. I know a lot people in this industry and whilst they are LARGELY good and upstanding members of the community they are sometimes either ignorant of the need to complete a tax return, make the assumption themselves that because of the questions they have themselves of legality of what they do they should not complete a tax return or yes, shock horror, don't want to complete a tax return because they just don't want to. Because sometimes they fund drug habbits. Because sometimes they are claiming benefits at the same time. Would I make moral judgements on such people? Given the people I know who are like this and their awful backgrounds I 100% would not.
Tell me, as a proportion of all escorts nationally, how many in your honest opinion complete tax returns? I would dare say not more than 10% if that.
Trust me - my views are not based on assumptions in the slightest. Take off your rose tinted glasses.
Really?
@ John Paris So if you go on a website like adultwork.com with independant escorts - thousands of them - you can tell me for a fact they are registered with HMRC?
That being said I would never condone any accountant acting unprofessionally towards any client of this sort.
But I do stand by my original conviction that I would not naturally expect many escorts to be completing tax returns.
A folly of my relative lack of experience in practise perhaps - but nothing to do with moral judgements. Please don't assume this of me.
Nonsense
Sorry, it's the fault of us bigoted unapproachable accountants that many of these people don't do a tax return. Nevermind the social reality to their situations.
Now whose making assumptions?