HMRC (tax authorities) are currently undertaking targeted tax inspections at sports clubs, businesses and coaches. Here are five top tips for passing a tax inspection, i.e. not having to pay additional tax or penalties!
Make sure your bookkeeping records are up to date and detailed enough to satisfy a HMRC (Her Majesties Revenue and Customs) tax inspector. Clubs usually do this very well but some coaches do struggle.
You should have a spreadsheet or computer system that details each and every person who has paid you (if you are running pay and play sessions, one entry for the total taken will suffice as the register will show who was there) throughout the year, together with copies of your (original) receipts for expenses you are claiming.
Keep all associated documents (bank statements, receipts, invoices, cheque and deposit books, etc. You are required to keep a minimum of six years’ worth of bookkeeping records.
Ensure that you are only claiming for business expenses and that you are claiming a ‘reasonable’ allowance for anything that may be a mixture of personal and business use.
Remember that travel from home to your principal place of work is not allowable and that sports clothing will only be allowable if it qualifies as uniform, i.e. it is branded with your business name/brand. Make sure you can justify any claim for use of home.
It’s important to know about the different ways you can pay for someone to provide you with a service in your business or club – self-employed, casual worker, employee, limited company or volunteer with expenses – and how to pay them according to HMRC regulations.
Make sure you have proof of their status (particularly important for self-employment) and that you have processed all of the necessary paperwork required.
Ensure that all income you have received is declared to HMRC on your tax return and that any diary you keep matches the details in your income spreadsheet.
Make sure that any lessons you cancelled or that didn’t take place are clearly marked as such in your diary or at the club/centre where you work so that HMRC don’t suspect you of not declaring income. Always provide your diary to an inspector to back up the income declared in your bookkeeping records.
We recommend that you engage the services of a qualified accountant and name them as your agent with HMRC. You ARE less likely to be inspected if you are represented by a qualified accountant with a good reputation in your area.
We recommend that you pay them to process your end of year accounts and to review what you are claiming for as expenses, and we recommend that you do your own bookkeeping.
If you have a question you would like answered, you can submit a question on our Facebook page at www.facebook.com/gbsport – we look forward to hearing from you.
GBSport members can contact us on 01952 201657 for specific telephone and email advice and support on this and any other business matter.