GoSimpleTax

Go Digital with GoSimpleTax for your client's self-assessment Tax Returns!   

Self Assessment tax return calculator and submission tool.

AIA has teamed up with GoSimpleTax to provide AIA members with a cost effective easy to use solution which will ensure you will be ready for Making Tax Digital for Income Tax, in the simplest most cost-effective way possible as HMRC moves away from maintaining their own software.

GoSimpleTax is a secure cloud-based solution and it is officially- recognised by HMRC. It includes partnership, non-resident and previous year returns. it has an easy to use interface and submits direct HMRC. GoSimpleTax are ready for MTD and the software shows the Tax liability in real time. It has a simple dashboard allowing you to switch between clients easily.

  • Low cost with no hidden charges
  • Partnership returns
  • Simple accountant’s dashboard
  • Discount to AIA Members
  • One to One product overview for AIA Members*

AIA members receive a 25% discount on GoSimpleTax to receive your discount code sign-up here www.gosimpletax.com/tax-aia  (example 100 client submissions £187.50inc using discount).

*contact Amanda.swales@gosimpletax.co.uk to book a free one to one product overview.

 

About GoSimpleTax Limited

A UK based software company specialising in providing an online solution in the simplest form possible– the only one of its kind!

Our tax calculator is a simple HMRC registered web tool that allows Tax Records to be maintained.  

These records can then be submitted direct to HMRC in-line with the current requirements under Self-Assessment and will continue through MTD

The company owners have worked in the software industry since 1985 producing tax compliance products for both individuals and accountants.

The last 5 years being focused on GoSimpleTax. This secure end to end encrypted App is a recognised HMRC supplier.

 

 

 

About GoSimpleVAT

GoSimpleVAT is MTD compliant VAT bridging/filing software that imports a VAT report from any spreadsheet or PDF.  Approved by HMRC and guaranteed to lead you to compliance. You can take advantage of our free 14-day trial (no credit card required) to see just how simple VAT filing through bridging software can be.

For just £240.00 per year (£60.00 per Qtr.) for unlimited clients and unlimited submission.

 

Discount to AIA Members

GoSimpleTax offer 25% discount on all software, to all AIA Members.

Simply follow any of the above links or click here to sign up to receive your discount code.

Blog

Whether you’re client is new or not to self-employment, record-keeping might sound like hard work to them – and certainly will be to you when they have days to spare for the deadline and cannot find ‘that receipt’. And while that may be true, it does come with its own reward – namely, that sole traders can claim back allowable expenses and pay less tax on their earnings.

 

HMRC has a number of rules about record-keeping though. Mostly, they relate to the storage of receipts and other documentation after you’ve filed your Self Assessment tax return for that tax year. By not adhering to them, your client can run the risk of losing out on any tax relief – or worse, being penalised by HMRC.

So, to ensure you get the tax-saving benefit of expenses, we’ve asked Mike Parkes from GoSimpleTax to set the record straight on record-keeping and provide guidance on how to help your clients claim.

What expenses can sole traders claim for?

There’s a whole host of expenses your client can claim as a sole trader, and they can potentially net them big savings if you utilise all that are available to you. Generally, people are aware that equipment purchases qualify as expenses, but there are many others.

They include:

Travel and accommodation

If your client is a sole trader they may have to cross up and down the country for long stints at a time, basing themselves near a site far from home. Luckily, HMRC considers hotel stays viable expenditure. The accommodation records (how long you’ve booked) should be as close as possible to the proposed timescale of the project you’re there to oversee. 

You can also claim tax relief on mileage or travel bookings made over the year, as well as meals on overnight trips. To ensure you stay within the bounds of eligible allowances, it’s worth consulting the gov.uk website.

Legal and financial costs

Your services as an accountant to support their venture, you can claim on their behalf your total costs. This may also be the case for any other professional services they may need for business purposes. Likewise, you can claim against bank costs such as overdraft and credit card charges. Costs like professional indemnity insurance premiums and lease payments can be claimed back, although there are rules if you’re using cash basis accounting.

Marketing costs

As your client is using these services purely for the purpose of driving their business forward, HMRC will permit marketing exercises as eligible expenses. That’s great news for sole traders who use flyers to drum up work, for example, or need a website that advertises their services.

Clothing Expense

While your client operates as a self-employed individual, they may also represent certain authorities when they’re caring for patients or vulnerable people. As a result, it may be expected to purchase a uniform or your own PPE.

Fortunately, you’re able to claim for it as an allowable business expense. Provided that what you’re purchasing is either a uniform or necessary protective clothing needed for your work, you’ll qualify for tax relief.

What’s more, if you need to purchase any additional PPE for your role (say, gloves and face masks), this is also considered an allowable expense.

Rent for premises

If your client rents a space purely for business purposes, then that too can be classed as an allowable expense.

Utilities

If your client works from home, you’re entitled to claim a proportion of the gas, electric, water, broadband and telephone bills as allowable expenses. There’s no exact science to this, but generally you’d divide the bill by the number of rooms in your house and then divide that figure based on the amount of time you work from home. The GOV.UK website has a good example. If that sounds too complex, then you can claim simplified expenses.

Subscriptions

If your clients freelance work requires you to pay a membership fee or would benefit from the purchase of a trade publication, these costs can be claimed back on. However, this does not extend to political party subscriptions.

These are just some of the examples of expenditure that you can claim on, but they highlight the wealth of opportunities available to all sole traders – provided they keep the relevant records. Claiming these expenses through your clients Self Assessment tax return helps to further reduce their tax liability and maximise their take-home pay.

What records should be kept?

In order to qualify for tax relief, your clients need to be able to present receipts when asked by HMRC. But to be wholly compliant, expenses aren’t the only figures you’ll need to report. In fact, if you’re self-employed, you’re legally required to keep records of the following:

  • All sales and income
  • All business expenses
  • VAT records if you’re registered for VAT
  • Records about your personal income
  • Your COVID-19 support grant

You won’t need to submit all of the above as part of the Self Assessment tax return. However, HMRC may ask you for them should they launch an investigation. Additionally, it helps you to work out your clients taxable income when filing.

If HMRC does launch an investigation, you’ll need to provide evidence of your clients finances. This will need to come in the form of:

  • Receipts for goods and stock
  • Bank statements and chequebook stubs
  • Sales invoices, till rolls and bank slips

Only with all of the above will you be able to safely claim any relevant expenses and stay on the right side of the taxman.

How long should records be kept?

Where businesses have to store receipts for six years, sole traders are only required to store theirs for five. That’s at least five years after the 31st January submission deadline of the relevant tax year.

This allows HMRC to investigate your clients accounts over a long period of time should they believe it necessary. Obviously, if you have claimed relief but misplaced the evidence, you may be penalised by HMRC all the same. So it’s best to tell your clients to invest in more than a wallet or a desk drawer for your receipts.

Where should records be stored?

Ideally, electronically. Train tickets and similar paper receipts are near impossible to keep in good quality for that length of time – especially if your client is lugging them around for up to five years in their coat pocket. You could have a physical filing system, but the amount of admin that would be required to keep it in order could quickly get exhausting.

Tax software, on the other hand, allows your clients to store certain documentation online. Some allow users to take photos of receipts from their phone, for instance. They can then upload the image to the app, keeping it secure in case you ever find yourself under investigation.

However, it’s worth bearing in mind that there are documents that HMRC will expect you to hold on to in their original form. Such documents usually show that you’ve had tax deducted. For example, if you’ve been an employee in that tax year, your P60 will prove your exemption.

Are you conscious you will not be able to use the government gateway for MTD for income tax?

GoSimpleTax software submits directly to HMRC and is the solution for accountants and sole traders alike to log all their income and expenses. The software will provide you with hints and tips that could save you money on allowances and expenses you may have missed.

Trial the software today for free - add up to five income and expense transactions per month and see your tax liability in real time at no cost to you. Pay only when you are ready to submit or use other key features such as receipt uploading.

AIA members receive a 25% discount – to get your discount code simply sign-up to try our software above and it will be emailed to you. Volume Discounts are available.

Further more, AIA members who sign up to try the software throughout September and October 2020 will be eligible for a free one to one session providing an insight to our software and answering any questions you may have – sign up now www.gosimpletax.com/tax-aia.

The paper return deadline is this month, 31st October, therefore we thought it would be useful to invite Mike Parkes from GoSimpleTax to explain how best to prepare your clients for the Self-Assessment tax return submission and file with confidence.

If your clients are new comers to submitting Self-Assessment tax returns, they should understand it pays to know that there are three ways of filing. Firstly, you can submit via the HMRC site and receive instant acknowledgement post-submission. You can also use commercial software to do this for you. Or, you can send a paper tax return to HMRC in the post.

Whichever method they choose, it’s important to understand their exact responsibility. For those who are self-employed sole traders or Landlords letting out UK property, paper submissions can be complicated as they involve additional forms and documentation.

  1. Be conscious of the deadline

Should your client choose to file a paper tax return, don’t forget to file before the 31st October deadline. We would recommend sending their paper submission prior to the October deadline, either through recorded delivery or with some proof of posting in order to prove your compliancy.

If they miss the deadline for submitting their paper return, don’t be tempted to file it late – you have until 31st January to complete one online. Just don’t submit both. You will be charged penalties from the 1st February for any late submissions.

  1. Organise supplementary pages

Remember, it isn’t enough to submit the main SA100 tax return. Your client needs to bundle it together with the rest of their documentation that references their property or self-employment income.

For any income as a landlord, all that’s required is to file an additional form (SA105) and submit it alongside their regular Self-Assessment tax return.

However, with self-employment, the additional sections required of your client could be either the SA103S or the SA103F. The difference between the two is that the former is for those who had an annual turnover below the VAT threshold for the tax year (£85,000 as of 2019/20), and the latter is for those who earn above the VAT threshold.

  1. Be open to online and prepare for Making Tax Digital for Income Tax

While your client may have historically always submitted their tax return by paper, the vast majority of tax returns are now submitted online. Improvements in technology and the extra three months to file are the main incentives to submit an online tax return.

Having an online account with HMRC allows you to not only extend your filing deadline but also check your details at any time to see how much tax is due and act accordingly.

If your client is happy to tweak the way in which they keep their records and adopt digital record-keeping, this will help minimise admin further, as well as enable you to submit their tax returns and automatically calculate the tax.

Going forward as of April 2023 your client will have to file their self-assessment digitally to HMRC providing updates every quarter via a digital platform.

Preparation is key, adopt the right approach now it could save both time and money, make the move to digital ahead of the deadline for MTD for Income Tax.

About GoSimpleTax

Trial the software today for free - add up to five income and expense transactions per month and see your tax liability in real time at no cost to you. Pay only when you are ready to submit or use other key features such as receipt uploading.

AIA members receive a 25% discount – to get your discount code simply sign-up to try our software above and it will be emailed to you. Volume Discounts are available.

Further more, AIA members who sign up to try the software throughout October 2020 will be eligible for a free one to one session providing an insight to our software and answering any questions you may have – sign up now www.gosimpletax.com/tax-aia or contact leeanne.ogden@gosimpletax.co.uk

Provided your clients are VAT-registered and have a taxable turnover above the threshold, you’ll be expected to assist in their MTD compliance. For the most part, you’ll need to help clients ensure that their VAT records are in a digital format. This will mean an end to any paper-based bookkeeping.

What VAT information must be stored digitally for MTD?

The VAT Notice 700/22 specifies that the following information must be kept, maintained and preserved in digital form:

  1. Business name
  2. Address of principle place of business
  3. Supplies made by third party agents
  4. VAT registration number
  5. VAT accounting scheme used
  6. Supplies made - including the time of supply (tax point), value of supply (net of VAT amount) and rate of VAT charged
  7. Supplies received - including time of supply (tax point), value of supply (net of VAT amount) and value of input tax being claimed

The following information has more specific rules surrounding it:

  1. Use of supplier statements 

HMRC will accept totals from supplier statements, rather than individual invoices - however their preference is the latter.

  1. Petty cash transactions

Regarding petty cash transactions, businesses can record these as a total value and total VAT. This applies to individual purchases of less than £50 - subject to a maximum of £500 (including VAT) per entry.

  1. Supplies received by third party agents

You only need to record the details once you receive the information from the agent. If this is sent as a summary, you can treat it as one invoice for record-keeping purposes.

  1. Charity fundraising events

When it comes to charity fundraising events, record-keeping can be hard. HMRC will accept all supplies made recorded as a single transaction. The same applies to supplies received.

  1. Reverse charge transactions

If your software records reverse charge transactions, you are not required to submit separate entries for supply and purchase. If your software does not record reverse charge transactions, you will need to record these twice - once as a supply made and once as a supply received.

  1. Summary data

HMRC require the following summary data to be recorded:

      • Output tax owed on sales
      • Output owed on purchases from EU member states
      • Tax required to pay as a result of reverse charge rules
      • Input tax claimed on purchases
      • Input tax allowable on purchases from EU member states
      • Total VAT due, or refund claimed after all adjustments
      • Any adjustments required or allowed by the VAT rules 
  1. Adjustments

If your client adjusts their VAT amount in line with existing VAT rules, they must log that adjustment within their chosen compatible software. There’s no obligation to log the calculations behind each adjustment, simply the total change to the VAT amount – however, storing calculations somewhere will assist against any future audits. The calculations you make using the HMRC tool can be stored however your client prefers.

  1. Correcting Errors

You can correct errors that are not deliberate, below the reporting threshold of £10,000 or for an accounting period that concluded less than four years ago. However, it’s important to ensure that the correcting adjustment is recorded in the compatible software.

Everything not covered above can be stored either digitally or on paper. These include:

  1. Flat Rate– Under this scheme, businesses don’t need to keep a digital record of purchases unless classed as capital expenditure goods (where input tax can be claimed). 
  2. Retail– If your client accounts for VAT using a retail scheme, they must keep a digital record of their Daily Gross Takings (DGT). They aren’t required to keep a separate digital record of supplies that make up DGT – just the DGT itself.

11.Margin Schemes - You are not required to keep the calculation of the marginal VAT charged digitally. However, you will need to keep a record of the adjustment made to the VAT calculation digitally. You are still required to keep the normal records associated with Margin Schemes.

What’s important is that your client has complete understanding that while not all of the above requires logging into their MTD compliance software, refusing to include certain calculations will harm them in the face of an investigation.

Recently, there has been a wave of interest in self-employment, as accountants you may have taken on some new clients. It makes sense, COVID-19 has proven that a large number of industries perhaps aren’t as resilient as once thought. And if you can achieve self-sustainability and climb your own ladder, why not try to do it now?

But while it’s exciting to build something of your own, you need to make sure you’re square with HMRC. To help, we’ve asked Mike Parkes from GoSimpleTax for his guidance. Here, he walks you through everything you will need to know about tax when working for yourself.

Register with HMRC

First things first, your client may need to set up as a sole trader. This involves the fun task of deciding on their business name.

Then, provided that they earned more than £1,000 in the last tax year, they need to register for Self Assessment with HMRC. It’s not an immediate legal requirement, although you will have to be registered by the 5th October of your second tax year. If you aren’t, they risk being penalised by HMRC.

To register, there are one of three forms they will need to fill out depending on the circumstances in which they are entering self-employment:

  • Going self-employed for the first time and have not previously filed a Self Assessment tax return
  • Going self-employed for the first time and have previously filed a Self Assessment tax return
  • Registered as self-employed previously

All three forms can be found on the GOV.UK site.

For those who have not submitted a Self Assessment tax return before, they will be sent a 10-digit Unique Taxpayer Reference (UTR) number following their initial registration. The UTR will subsequently be requested of you in almost all interactions you have with HMRC moving forwards. It takes up to 10 days to arrive in the post, so don’t leave their registration to the last minute or they will run the risk of missing the Self Assessment deadline.

Know your expenses

When it comes to your clients Self Assessment, trust me when I say that expenses can make all the difference between being profitable… and being less so.

Now, we all know that sole traders can claim for some of their tools, travel and home office equipment. But what you might not know is that you can also claim for pre-trade expenses – in other words, items you purchased before trading to get your business to a point where it could open successfully.

This includes expenditure like:

  • Advertising – Your business won’t survive on word of mouth alone, so be sure to hold on to receipts of any offline or online media spend you invest in.
  • Rent for premises – If you rent a space purely for business purposes, then that too can be classed as an allowable expense.
  • Insurance – Whether it’s employers’ liability insurance or public liability insurance you’re after, both can equally be covered by expenses.

What’s more, these pre-trade expenses may include items your client own privately that they are now going to use within your business, like a laptop.

Claiming these expenses through the Self Assessment tax return helps to further reduce your clients tax liability and maximise their take-home pay.

Keep records

Of course, you can’t claim anything if you don’t have accurate and up-to-date information off your client. And this isn’t just for the purposes of  expenses either. As a sole trader, they are obliged to keep clear records of all business transactions.

That means receipts, invoices and bank statements all need to be available should the taxman require them to be presented when under enquiry or investigation. Yet there are added benefits of doing this: it makes filling in the Self Assessment tax return easier, and keeps you aware of any opportunities to reduce your clients tax exposure.

What’s more, tax software like GoSimpleTax makes record-keeping easy. With us, your client has the option to take a photo of their paper receipts and upload them to the platform so you as their accountant has all the paperwork when you need it.

About GoSimpleTax and Your AIA Member Discount

With GoSimpleTax software you can avoid being caught off guard in January by working out your clients tax liability ahead of time.

Their award-winning platform lets you log your income and expenditure in real time, and uses this information to automatically calculate your tax bill.

AIA members visit www.gosimpletax.com/tax-aia to claim your 25% discount or check out the new freemium version of the software.