By MALCOLM CHAMBERS (B.A. CPFA),
Chambers Accounting Ltd
Tax Tips
Firstly, it must be emphasised that the brief advice given in this article is no substitute for the reliable professional advice you will receive if you engage the services of a qualified accountant. Neither is the article aimed at saving you tax, but hopefully it may assist in ensuring that you are assessed for the correct amount of tax under the law.
“Generally, the higher the amount you claim the more likely it is that
you will be asked to prove it.
Tip 1. Keep it legal You can legitimately minimise your tax by:
• Claiming all available allowances and reliefs. • Claiming tax relief for expenditure incurred “wholly and exclusively” for business purposes.
• Planning your affairs to keep your tax as low as possible.
”
for the self-employed
Illegal acts involve deliberately or dishonestly evading tax by:
• Claiming tax relief for non-business expenses. • Over-claiming expenses. • Failing to include all taxable income in accounts/tax returns.
And the consequences if you do? – tax investigations, back tax with interest and penalties, time, hassle, professional fees, and even prosecution and prison.
Tip 2. Keep all business receipts All expenditure recorded in your accounts should be supported by original receipts, invoices or similar. Make a note on each one to clarify what it is and why it was incurred. Retain them for at least six years. You will have some unreceipted expenses e.g. bus fares, parking, etc – keep a diary in which you can record these (see use of car).
Tip 3. Prove business use Some of your expenses will be mixed, private and business use, and you may be required to justify the amount you claim for business use. You will also
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