Forum

• # 100710
• Thu 24 Jul 2014 04:12 PM

Hi 

I have two question about someone who is self employed he is a scrap metal dealer but he doesnt have invoices or any documents for the metal got. Do you think i need to make him to make people sigh that they give him the metal?

And my second question is about the mileage if he keeps log book how do i put it as expence in lets say sage or i put the petrol bills in sage? I understand that i do put the allowance - prive use in the self assesment but i am interested more in what to do in the books do i put the petrol recipts (and other things as MOT, repairs etc) as personal drawing so i can reconcile the bank and then i keep separate log for the petrol cost and usage every month so i can put it as allowable expences in the self assesment? And if so can i claim some expences as electricity or rent of the home as it is used for office? Just one more thing when keeping log book do you count the first trip to the place of work or it is only the trips between the first place of work and the last place but to the firs place and from the last place to home is not counted?

Thank you for you help

Regards

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• # 100712
• Thu 24 Jul 2014 10:21 PM

Hi Bedros,

Regarding the first part of your question about the scrap dealer not having paperwork for the scrap metal; you might want to get him to look on the gov.uk site (link below), if he isn't registered and filling out waste transfer certificates then he isn't acting within the law and leaving himself open to prosecution.

https://www.gov.uk/scrap-metal-dealer-registration

He has to keep records of all materials moved, including where they came from and signed by the person he received it off, so that should make your job of convincing him to keep records a little easier.

As far as the expenses go, have you considered Simplified Expenses rates?

Ade

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• # 100714
• Fri 25 Jul 2014 07:01 AM

Hi Ade

Thank you for your respond ill speak to him about the scrap metal as if he is not registered he should get it done. And as far as i read he can pay cash anymore for the metal as well.

About the expences you gave me very good idea about those expences i already knew about the miliage that he can claim it as expence but didnt knew how it will work for the home. Do you think i should put in the records what is the busines miliage time 45p and do all the other expences and dont do bank reconciliation as there will be personal expences and the petrol or mot recipts which i really dont need but he needs to keep as well as the log book?

Thank you 

Regards

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• # 100716
• Fri 25 Jul 2014 12:14 PM

Hi 

Any materials he buys or sells you need invoice for.  You will need to ask him for these so that the can be put through the system.

With the mileage you will need to put this through as an expense accout for him to motoring costs.  Also if he is vat registered he will be entitled to claim the taxable element back within this.  You can get the latest rates and guides for this  of off the HMRC site.  The first 10000 miles are chaarged at 45p per mile after which it drops to 25p a mile.

Lynda

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• # 100718
• Fri 25 Jul 2014 04:28 PM

Hi Lynda

Thank you for you answer. The first part i understand and i will ask him to do it.

About the motoring expence just to make it clear this is what i understand: He needs to keep log book and all the miles per month/ year i calculate to the rate (45p for the first 10 000 at the moment) so the entry will be debit motor expences/ credit bank (and the sum is for example 1000 miles x0.45p) 450 GBP. As he is not vat registreted i will not need any recipts as this is the allowance and even if he spend more it will not be accepted in the tax return.

Regards

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• # 100723
• Sun 27 Jul 2014 10:12 AM

Hi 

Any expense claims you must make sure you have any receipts to back up the claim.  If HMRC do a tax inspection they would expect to see petrol receipts and all relevant receipts to do with expenses. 

The way in which you would need to put it through the accounts are:

All Invoices go to the expense account as a credit.

The payment for the expense account is Credit the bank and debit the expense account.

The mileage allowance for upto 10000 is 45p a mile  and after this it is 25p a mile.  But make sure you put a copy of his mileage log in with the purchase invoices attached to the expense claim.

Lynda

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• # 100727
• Sun 27 Jul 2014 02:34 PM

Hi Lynda

Thank you very much for the reply. Sorry for the question but i hope is the final one. 

So as i understand it i put all his recipts(motor i mean)  as expence in his books and then when  we do the self assesment we calculate his yearly miliage and see  how much he can cliam based on the HMRC allowance and put the miliage allowance figure in the return but in his books is the real cost of his expences so he can see them and decide if he spends too much on it. And if the sppending on his motor expences exceed the HMRC limits he cant claim it and he is supposed to pay tax on the excees amount

Regards 

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• # 100833
• Mon 04 Aug 2014 09:45 AM

Hi Bedros

Who is preparing the clients self-assessment tax return? Is it you or does the client have an accountant?

You need to know whether the vehicle has been written into the business as an asset or not. If it has then the motoring expenses are recorded as and when they are incurred (e.g. fuel, servicing, insurance). If not, then the mileage method is used. Once started, the method chosen must be the same year on year until the vehicle is changed.

Phil

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• # 100877
• Wed 06 Aug 2014 01:02 PM

Hi Phil

Thank you for your responce. I am just a little bit confused but i hope now i can do it this way and i think is the right one. 

As the van is not a company assets  i will just put through his self assesment his miliage x 0.45p per mile (first 10 000) 

but my question is if i put this in his books is it going to like like 

debit motor expences / credit bank account 

and if so i will have trouble reconciling his bank account but if i dont need to rencile the bank will be fine. but i was thinking to put in the books all of his petrol recipts so he knows how much he spent on the car in real money and then when the self assesment is prepared to calculate all the miles and use this method. What do you think? 

Thank you

Regards

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• # 100890
• Wed 06 Aug 2014 05:23 PM

You need to do one of:

1. Actual expenditure incurred

or

2. Mileage claim

If you do 2, it's DR Motor Expenses, CR Capital introduced (or set up a trade creditor account called "Proprietor expenses" and CR the amounts to that and then net this off against Drawings periodically).

If you do 1, you will still need to ensure that an appropriate adjustment is made for private use (by reference to mileage records). Additionally, there is the cost of servicing, MOT etc. and a business proportion of the capital cost on which there may be a capital allowance available (and note these are different for cars and vans)

The mileage allowance method is designed to include an element of the capital cost, as well the revenue expenditure (fuel, maintenance), so, given your client should be keeping mileage records anyway, I would suggest 2 will be the much simpler option.

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• # 100894
• Wed 06 Aug 2014 07:00 PM

Hi Phil

Thank you very much for the aswer i will be going for the second method which i believe is sipler as well. Just to make clear two last things:

In this case i dont need to reconcile the bank right?

and the second one is why i tranfer it to drawings?!

Regards

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• # 100897
• Wed 06 Aug 2014 08:34 PM

With method 2 you will be Crediting the Proprietor either as as trade creditor or his equity in the bottom half of the balance sheet. So it won't interfere with the bank account at all.

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• # 100904
• Wed 06 Aug 2014 10:14 PM

Hi Phil

Thank you for the advice and help. i will dr motor expences and cr capital introduced; afterwhich at the end of every three months i think to transfer it from capital introduced to drawings. i will ask him to keep his miliage log and recipts in case hmrc check him. i was thinking about the reconciliation of the bank but i will put in the books only business related expences and everything else will go to drawings (including the motor expences as they will be calculated on miliage). 

Thank you once again 

Regards

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