Want to buy :)

[mrs maggot]

again john that was my point, as BMS says - how many do, a lot of people sell "under the radar" i would imagine if even 10% of people doing home "hobbies" declared their extra income the tax man would see a welcome increase in revenue.

The grey market of people earning a "bit on the side" for holidays, subsidising a lower income through job hours decrease etc, its easy to see its appeal, so if you get shown some figures, but they were not made for the tax man, you can see why there might be some appeal, our friends were gullible yes, but i can see how it happened.

[John G]

I hope your friends can make a go of it - its hard enough to start with, never mind worrying about a 5k deficit.

[bms]

I didn't say you HAD to declare it - just that you had the means to declare it, if and when asked.

We digress a little OT here, but if you don't declare it, but "have the means to do so when asked" then expect the tax man to offer you a penalty of up to 100% of the tax owed plus interest. I know where you're coming from John and I'm sure lots of sideline income doesn't get declared but everyone should be aware that it's not just paying the tax that would have been due, but up to 100% extra plus interest (and I believe the taxman can go back up to 6 years). Moral of the story is to have an accountant, keep books and ensure your accountant knows how to minimise your tax bill legally Helps also when you come to want to sell your business.

[John G]

Hi Martin, I didn't know that

Good job i'm legit. Traded for 7 years now, vat registered so have to keep all my books upto date and like you say - makes it easier if ever I wanted to sell up.

[JSR]

Moral of the story is to have an accountant, keep books and ensure your accountant knows how to minimise your tax bill legally

Very true. The first thing I was adamant about when I started out on my own was to get an accountant (the first one I had wasn't much cop, but my current one is great). I feel that if you're serious about your business and intend to be around in the future, then you've got to play by the system.

An accountant can also be useful for other things, such as proving a low income when it comes to things like rates, etc.

Before I started out on my own, a friend told me that a good accountant should save you more than he charges, so it shouldn't be a big deal to get everything done on the level. If your business is relatively simple (for instance, if you're below the VAT threshold and aren't registered for VAT) then the accountant isn't going to charge a huge amount anyway.

i would imagine if even 10% of people doing home "hobbies" declared their extra income the tax man would see a welcome increase in revenue.

Don't forget that if you're on low income, there's a minimum income level you're allowed to earn before you need to pay tax (I think it's almost £6,500 at the moment) - so, even when you file your tax return, you may have nothing to pay. In my first year, I got a tax refund because I'd paid tax in via my job but, by the end of that year I hadn't earned enough to have been paying tax in the first place - so I got a nice little refund (which is the exact opposite of the taxman seeing an increase in revenue... ).

Initially you may not exceed the minimum tax threshold (unless, of course, you''re already above or near the tax threshold for other income) - this is particularly true when you're starting out because you'll be able to amortise your startup-costs (equipment, and other hardware, etc) over the first couple of years. This is where the accountant can assist in helping you minimise tax.

Even if you are lucky enough to exceed the tax threshold, the tax to pay is on the amount that exceeds the limit, not on all of it. There's really no excuse for avoiding the system because, when the taxman does come knocking at your door, what have you really saved?