Yes you are right and I think I just mentioned I was going to do that. I don't think it's that unusual for people to do or try to do various financial tasks themselves. I don't believe it's wrong to do that, it does indeed carry some risks as you say. Not that is relevant to the question but I have engaged accountants and legal advisors multiple times over the past twenty years in business. I've always done some research first though. I was not attempting to present a full picture of the situation as I don't expect people here to act as my advisors. Of course they will not and would not have any responsibility for any advice given either. I was just asking about one aspect of the problem and I have found that it is indeed more complicated than I thought. I do take a genuine interest in these things and in the case of the previous question I asked then the references given were very insightful indeed and highly appreciated. Likewise this discussion has been extremely helpful, but as you say, it's ultimately fairly complex and I will be paying for advice. I'm not in any way attempting to make up rules. Furthermore fairness is pretty well irrelevant when it comes to what the rules actually are and can only really be an initial guide as to what the rules might be. Your advice, even where critical, is anyway appreciated.
Thanks, yes I will look into this. My contract was with an EU based entity, to perform work in their UK office. I don't know the legal status of that office. The final work product was for a UK customer of the EU company. That UK customer is of course not my customer, it just indicates my customer's purpose. Don't know yet if any of this matters, will indeed hire someone if it's not clear as others have suggested :-)
Thanks, this seems like excellent advice! I had perhaps read and remembered the part about goods and the subsequent statement that the "Flat rate scheme puts you at a disadvantage compared to your competitors".
I am still curious though as businesses must buy goods and services all the time from other EU countries without giving VAT details, paying VAT where perhaps they did not need to. Are all EU suppliers therefore open to having to recalculate everything, on request, even 15 months later? Say for example my company just orders a printer from France without giving any VAT number.... it seems unlikely I could go back to them later or that the seller acted improperly. Just interested here...
Also, as a slight complication, the EU company was hiring me to do work for one of their UK customers. This is another reason I thought VAT might be appropriate. As mentioned above I do admit that I don't know much about VAT - I do want to learn though. Perhaps the logic is that the service was delivered to the company paying for it who then technically delivered it back to the UK?
It's b2b and they have not reclaimed the VAT from HMRC.
The reason I don't think it can be recouped at my end is that under the flat rate scheme I have to pay VAT based on my turnover which won't change that much if I do not charge VAT.
OK, thanks, accepted that I cannot do this then. Will have to give ITA 2007 s119 a careful read!
lionofludesch, I guess a simple set of numbers would be 17.5k property income (nothing else) would result in 5k taxed at 20%. Then bringing in 5k property losses from previous years would result in no tax. Alternatively bringing in 5k unused residential finance from previous years also results in no tax. I have this kind of thing but slightly more complicated (some dividends and some PAYE).
So then my thinking was that the unused finance costs are only ever going to be worth 20%, whereas the losses from previous years might be worth 40% if used next year when perhaps some property income would otherwise be charged at 40%. Hence I thought I might as well use the finance costs first, had it been allowed.
Life is a bit simpler though if there is only one way to do it.
Thanks DJKL & Tim and great references. These make sense as far as applying the property losses first to calculate the tax if you are claiming those losses, but is there a reason I must bring the property losses forward this year?
Maybe it's a more general question in principal as to whether offsetting a loss from previous years is optional, and whether if you don't exercise that option, you can exercise it a year later if there has been a profit declared in the interim? I could ask that about maybe corporation tax as well I suppose although I don't know what the advantage would be there.
Not really trying to dispute what you are saying but the self assessment form (HMRC web version) would allow me to apply either the previous years loss or the previous years unused finance and the form will quite likely be the same next year. It also invites you to put in only what you want to use rather than tracking the totals. So what actually happens if I do it the other way around? All I can think of would be maybe someone saying you can't carry a loss past a profit perhaps, if there is such a principal. I don't actually want to do it wrongly as there are of course many ways to do that, I'm just interested in exactly how this works...
My answers
Yes you are right and I think I just mentioned I was going to do that. I don't think it's that unusual for people to do or try to do various financial tasks themselves. I don't believe it's wrong to do that, it does indeed carry some risks as you say. Not that is relevant to the question but I have engaged accountants and legal advisors multiple times over the past twenty years in business. I've always done some research first though. I was not attempting to present a full picture of the situation as I don't expect people here to act as my advisors. Of course they will not and would not have any responsibility for any advice given either. I was just asking about one aspect of the problem and I have found that it is indeed more complicated than I thought. I do take a genuine interest in these things and in the case of the previous question I asked then the references given were very insightful indeed and highly appreciated. Likewise this discussion has been extremely helpful, but as you say, it's ultimately fairly complex and I will be paying for advice. I'm not in any way attempting to make up rules. Furthermore fairness is pretty well irrelevant when it comes to what the rules actually are and can only really be an initial guide as to what the rules might be. Your advice, even where critical, is anyway appreciated.
Thanks, yes I will look into this. My contract was with an EU based entity, to perform work in their UK office. I don't know the legal status of that office. The final work product was for a UK customer of the EU company. That UK customer is of course not my customer, it just indicates my customer's purpose. Don't know yet if any of this matters, will indeed hire someone if it's not clear as others have suggested :-)
Thanks, this seems like excellent advice! I had perhaps read and remembered the part about goods and the subsequent statement that the "Flat rate scheme puts you at a disadvantage compared to your competitors".
I am still curious though as businesses must buy goods and services all the time from other EU countries without giving VAT details, paying VAT where perhaps they did not need to. Are all EU suppliers therefore open to having to recalculate everything, on request, even 15 months later? Say for example my company just orders a printer from France without giving any VAT number.... it seems unlikely I could go back to them later or that the seller acted improperly. Just interested here...
Also, as a slight complication, the EU company was hiring me to do work for one of their UK customers. This is another reason I thought VAT might be appropriate. As mentioned above I do admit that I don't know much about VAT - I do want to learn though. Perhaps the logic is that the service was delivered to the company paying for it who then technically delivered it back to the UK?
Thanks again for your comments :-)
It's b2b and they have not reclaimed the VAT from HMRC.
The reason I don't think it can be recouped at my end is that under the flat rate scheme I have to pay VAT based on my turnover which won't change that much if I do not charge VAT.
They did not supply a VAT number at the time. They have now sent a VAT number with the request to re-invoice.
OK, thanks, accepted that I cannot do this then. Will have to give ITA 2007 s119 a careful read!
lionofludesch, I guess a simple set of numbers would be 17.5k property income (nothing else) would result in 5k taxed at 20%. Then bringing in 5k property losses from previous years would result in no tax. Alternatively bringing in 5k unused residential finance from previous years also results in no tax. I have this kind of thing but slightly more complicated (some dividends and some PAYE).
So then my thinking was that the unused finance costs are only ever going to be worth 20%, whereas the losses from previous years might be worth 40% if used next year when perhaps some property income would otherwise be charged at 40%. Hence I thought I might as well use the finance costs first, had it been allowed.
Life is a bit simpler though if there is only one way to do it.
Thanks DJKL & Tim and great references. These make sense as far as applying the property losses first to calculate the tax if you are claiming those losses, but is there a reason I must bring the property losses forward this year?
Maybe it's a more general question in principal as to whether offsetting a loss from previous years is optional, and whether if you don't exercise that option, you can exercise it a year later if there has been a profit declared in the interim? I could ask that about maybe corporation tax as well I suppose although I don't know what the advantage would be there.
Not really trying to dispute what you are saying but the self assessment form (HMRC web version) would allow me to apply either the previous years loss or the previous years unused finance and the form will quite likely be the same next year. It also invites you to put in only what you want to use rather than tracking the totals. So what actually happens if I do it the other way around? All I can think of would be maybe someone saying you can't carry a loss past a profit perhaps, if there is such a principal. I don't actually want to do it wrongly as there are of course many ways to do that, I'm just interested in exactly how this works...