FINANCE The tax man cometh... Accountant Jamie Crampton asks if you’ve got anything to declare?

aving previously targeted plumbers and doctors, HM Revenue & Customs has now decided to focus its attention on the area of private tuition and coaching (including sports tuition/coaching/personal training) – meaning that it has evidence/suspicion that some people operating in these fields may be earning extra income that is not being declared as taxable income and, therefore, not being taxed.

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There are usually 2 main reasons why this happens: l The recipient of the income doesn’t feel that it is sufficient to bother declaring (usually if it is from a “second job”) and hasn’t registered as self-employed or hasn’t completed a self assessment return or

l The recipient of the income has received it in cash and forgotten to declare it, either accidentally or deliberately (usually in cases of people who are registered as self employed).

The rules regarding extra income are pretty simple – if you have any, you must declare it. It’s the law! Another thing to remember is that the good old-fashioned Inland Revenue you may remember has changed in recent years – these days they are like any other business – they have targets to meet (i.e tax collection) and they will use various methods to ensure they meet them.

This means that legally any extra income you receive from teaching a couple of classes per week must be declared. How this income is treated will depend on from whom the income is received. If the income is received

from a gym, sports centre or leisure centre then there is a good chance that it may already be taxed in which case, depending on your other income, you may even end up overpaying tax. If the income is received from individuals who are paying you (for example) £5 each for a Zumba class then this will obviously not be taxed and should be declared.

Don’t forget however that if you do have “extra income” then the chances are that you may have expenses that you have to incur to get this income – such as hiring the hall, travelling expenses, poster printing… etc. These can all be deducted from the extra income. So it may actually work out that, by the time your expenses are taken into account, your extra “income” is nothing like you thought it was.

If you do have any extra income then you need to contact HMRC and tell them, or contact an accountant who will do it for you. The alternative is that HMRC find out – in which case you can be fined. This is an avenue that you would be best advised to avoid going down.

THE AUTHOR Jamie Crampton qualified as a Chartered Management Accountant in 1995 and in 2008 set up Accounting 4 Fitness, dealing with clients in the fitness industry. In addition to

this he advises personal training students on setting up in business and works with accounting students at the University of Bedfordshire in Luton.

24 The REPs Journal 2011;22(September):24-25 The REPS Journal 2009;00(Month):00-00