The Highs and Lows of working for yourself

Sep 26, 2016

As weeks go, last week was not the best.

I found myself wondering what on earth I was doing working for myself.

My computer got hacked – where was my IT department?

My printer poured ink from its backside all over my desk and carpet, and then refused to print anything – where were the office cleaners, and the IT department again?

Clients with very tight deadlines were very late sending information over, but the work needed to be finished – where was my extensive accounts team?

My son had a major wobbly about life in general – where was my husband? (oh yes – on a boys jolly sailing trip with no phone signal! Typical!!)

And I had a stinking cold.

So by Wednesday I was tearing my hair out!

But….one slightly hysterical call to my computer chappie later, he had logged into my computer, done all sorts of clever things and assured me it was all OK. There was still money in my bank account and the world had not ended.

Staples was open til 9pm and the assistant got that I didn’t really care whether it could scan upside down, fax straight from my phone and make the tea at the same time, or that I could order it online and save £10 if I could wait 3 days, I just needed something that would print NOW!

My 2 subcontractors said yes they’d love a few extra hours and we got everything out in time.

A good night’s sleep seemed to work wonders for my son, and hubby eventually reappeared from his trip (and obviously decided it would be a good idea to sort the washing himself!)

So although it was a tough week, I am still so grateful I work for myself.  I DO have a great team to support me, I LOVE the flexibility it gives me, I CAN go to all those school events, and the dog and I have very intelligent conversations about complex tax issues!

It’s not always plain sailing, it can be a bit of a rollercoaster, but it’s fun and I wouldn’t have it any other way.

Since my last blog introducing “making tax digital “ things have moved on, so this week’s blog is an update on what we know so far, and how it may affect you – as it will!

In August 2016 HMRC issued policy papers together with six consultations on MTD. In a press release it says that it’s a digital revolution for the tax system to cut red tape for British business!

It will apply to a wide range of taxpayers from 2018, including most businesses, self-employed people, landlords as well as individual taxpayers.  Currently only businesses and landlords with a turnover (not profit) of under £10,000 are exempt.

Once implemented, in theory you will be able to see, via your personal digital account, a complete picture of your tax affairs, and you’ll be able to manage all of your liabilities at the same time and in the same place.

HMRC will collect and process information in real time and you’ll no longer have to wait until the end of the tax year to see how much you owe.  Sounds lovely, but how are HMRC going to get the information?

Businesses will have to report figures quarterly to HMRC, making adjustments at the year end for accounting and tax adjustments.  Records will have to be kept digitally with the expectation that invoices, receipt etc will be kept digitally through software, using apps and cameras to upload pdf’s etc.  Some free software may be available online, but HMRC will not be providing its own free software to help you!!  That means, no more waiting to the year end and handing over a shoebox of receipts to your accountant – HMRC need up to date information quarterly!

But don’t worry – they haven’t decided on the fines yet for late filing………but they will!

Although HMRC claims that the annual tax return will go, businesses will still need to prepare year end accounts in order to reconcile their quarterly payments and claim various reliefs and make accounting adjustments.

They will be required to file a year end declaration, instead of a personal or corporation tax return.  The key difference between the year end declaration and a tax return, other than in name, appears to be that HMRC will pre-populate some of the return figures, e.g. bank interest, income from employment.

For the self employed, it is assumed that HMRC might attempt to pre-populate the year-end declaration with data submitted in the quarterly return figures, however, as currently it the case with VAT, a VAT registered businesses will still need to reconcile their quarterly returns to their year-end accounts and so all must reconcile to the end of year declaration.

Oh – and all taxpayers will need to check that pre-populated data is correct!

So… the upshot of all these changes are that, as a business owner, you are going to have to sooner or later, go digital with your accounts. All the “cloud” package providers will be making sure their software provides HMRC with the information they will need, so you just need to find the one you like and get going!!

For more information, or advice on how to choose the right digital accounts package for you contact Rosie Forsyth.