Bank managers are nervously looking at the easy loans they all too readily sold over the past few years nervously.

The promise that the real estate security that backed it is “as safe as houses” now rings rather hollow. Will the client still pay the loan when his house has negative equity? Suddenly the accountant’s certificate, so cursorily skirted over when the loan was first issued, is being dug out of dusty drawers and pored over.

If the client can’t pay, can the accountant? Surely the accountant certified that his client was good for the loan. Accountants look like an increasingly attractive target for litigation, backed as they are by the deep pockets of their professional indemnity insurers.

However not every loss will justify a claim. Not every error will sound in damages. An accountant is judged both in contract and tort against the standard of the reasonable care and skill that might b expected of an accountant of ordinary competent experience. An accountant will only be liable if he falls short of that standard.

To know how far that duty goes, one must ask what the accountant was contracted to do? One must remember that there is no such thing as a general retainer for an accountant. So the starting point is what the accountant has been employed to do under the engagement letter. Or what he was requested and he agreed to do. And what fiduciary duties he may have had. Moreover, unlike an auditor, an accountant can further limit his liability to some extent by using exclusion clauses and disclaimers.

——————————————————————————-
Professor Watson-Gandy is a barrister at Thirteen Old Square. The new edition of Watson-Gandy on Accountants: Law, Practice, Precedents and Procedure has just been published by Hammicks Legal, price £89

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If however the property is a holiday home, the activity of letting is considered to be a trade. One of the advantages of a holiday home arrangement is that these losses can be set off against your other income in the year in which they arise to reduce your tax bill.

To qualify as a holiday home business you must observe certain rules…

the property must be available to let as holiday accommodation for at least 140 days in the year.
you must actually let the property, at proper commercial rents for 70 days a year, and
you must not let to the same person for more than 31 days during 7 months of the year.
Keep to these three simple rules and you will be in the holiday lets business!

Because the letting of holiday homes is considered a trade, the property itself is considered to be a business asset. As such it will normally qualify for much more lenient tax treatment when you sell.

If you have owned the property for more than two years, and you are a higher rate tax payer, you should pay no more than 10% capital gains tax when you sell by taking advantage of business asset taper relief.

If you use the property yourself, just observe these rules…

Make sure that you have the property available to let for at least 140 days.
When you claim expenses disallow a proportion to cover private use holidays!
It is also possible to rollover the capital gain against the purchase of another business asset because the property qualifies as a trading asset.

Using Caravans & Boats As Holiday Homes

You need to convince HMRC that the boat or caravan is let as a holiday home by following the same rules as above. It is important that the caravan or boat moves (and is not in a permanent location) although in the case of caravans HMRC accept they can be permanent where it is a registered holiday caravan site.

If you can prove that your boat or caravan are let as holiday homes on this basis, HM Revenue & Customs will allow you to claim a deduction from your rents received, called a capital allowance. From 2008/09, in the year that you purchase the boat or caravan you can claim 100% of the cost using the Annual Investment Allowance (for the first £50,000 of capital expenditure). After the first year 20% of the written down value.

Let’s say that you have a boat that qualifies that cost you £20,000 and you receive rents for letting it out of £5000. Ordinarily you would pay tax on the £5,000 but you can now claim 100% of the boat’s cost, £20,000. This makes a loss of £15,000 which you can set against your other earnings in the same tax year and claim a tax refund! Although if you use the boat privately the amount of capital allowance you can set against the rents is reduced.

It’s one way of getting the Taxman to contribute towards the cost of that yacht you always wanted.

Please note, this is a fairly aggressive form of tax planning and HMRC may try to offer some resistance.

How We Can Help You

We can offer you specific advice in your own situation regarding the tax treatment of holiday homes, caravans and boats.

Jonathan Amponsah BSc FCCA is a UK Tax Expert and the founding partner of AMP Associates – A specialist firm of chartered certified accountants and tax advisers based in London and Surrey. Jonathan advises on a wide range of business and tax issues and he is recognized for his proactive and innovative approach to taxation.

Jonathan can be contacted on 0845 009 8845 or email:jonathan@ampassociates.co.uk

Higher debts have helped to increase the instances of mortgage arrears, CCJs, repossessions and bankruptcies. There has been an increase in the ‘non-standard’ population, i.e. there are more self-employed people and migrant workers.

The loans market is also affected by legislative influences, particularly with regard to regulation in mortgages and insurance by the Financial Services Authority. The Consumer Credit Act 2006 has reformed legislation and future changes are to be adopted. There is also pressure from the Office of Fair Trading with respect to ‘single-premium insurance’ and it has referred payment protection insurance (PPI) to the Competition Commission who’s findings have been particularly damaging for the industry.

The regulatory changes should lead to a more transparent secured loan market. For example, the OFT’s Consumer Credit Advertisements Regulation 2004 means less confusion for consumers, although there is still aggressive press and TV advertising.

There is a general market acceptance of credit, equity drawdown, living for today and paying it off tomorrow!

In a maturing market the pressure and competition among lenders on first mortgages is increasing. Legislation adds to the processing times and costs while margins and market share are becoming ever more difficult to deliver. The specialist market is becoming more mainstream and acceptable, particularly the second-charge lending market.

Niche markets

The secured loan, or second-charge, market is around 10 years old and has expanded rapidly over that time with compounded annual growth of more than 50 per cent over the last five years. It reached its peak in 2003 when gross lending reached £7 billion but towards the end of 2004 the market started to dip and is now worth around £6 billion. Some of the reasons for this were the five interest rate rises in 2003 and 2004, a slowdown in house price growth and a fall in consumer spending (ONS Social Trends 2007).

However, Datamonitor, which supplied these figures, believes the second-charge market will pick by the end of this year and grow steadily to £6.3 billion by 2010.

The market is still fairly buoyant and further fuelled by the current lack of primary finance available in UK housing and the insatiable appetite for credit that we have in this country.

On top of this it has significantly improved its market perception.

Equity release

Another growing area is the equity release mortgage market, which has seen compounded annual growth of 17.8 per cent over the last four years. In 2005 gross advances were estimated to be almost £3 billion. There is probably room for more competition as three players account for around 80 per cent of lifetime market share.

This market is also being fuelled by the pension crisis and a changing attitude to inheritance – the need to pass on inheritance to offspring will potentially change. A third of parents leave nothing to their children and the children expect their parents to enjoy their final years. In addition, the population that remains childless is expected to increase from 10 per cent to 20 per cent over the next 20 years.

Average loan

The average second-charge advance is quite high – it can be more than £40,000 and there are often loan-to-value constraints. Loan consolidation is the most common reason for borrowing, representing 55 per cent of total second-charge business. Borrowing money in this way is often positioned as a lifestyle change, for example after a relationship breakdown, loss of job and so on.

Redemption charges are high, often at 6 per cent, as the average loan is for 18 months. People sometimes use secured loans as a form of mid-term bridging as they try to get their life back on course and get into a position where they can swap their secured loan for a remortgage or further advance, or indeed pay it off.

Payment Protection Insurance

Each year @ 2.5m PPI policies are sold on mortgages alone - 75% are provided directly by the Lenders & 22% via intermediaries (source CML). The average cost of a policy is £2000 (source ABI) with typical undisclosed lender & intermediary commission of £1500 (source Mortgage Protection UK).

The interest alone on this undisclosed element during the course of a 25 yr mortgage is £4 900 (at current rates).

If you multiply 2.5 million by £1500 and take 22% of the figure (i.e. the broker introduced PPI) then each year £825m of undeclared commission has been charged to borrowers, and over 10 years this comes to £8.25bn. Compounded at current interest rates for the typical borrower the total value comes to £26.9bn.

This figure excludes any PPI sold in the second charge arena mentioned above and further excludes the £5.5bn a month lent by specialist lenders, excluding Banks & Building societies that is secured against property (source Bank of England).

Best Advice

Members will of course be aware of the need to give best advice to clients and as such should be aware of instances of where clients may have unwittingly been overcharged and resources available to them to rectify matters.

The LoanCheck Foundation

The LoanCheck Foundation’s main principle is to provide an ethical service. It has been set up with two main objectives in mind:-

1. To allow individuals to freely check to see if they are being or have been overcharged on a loan or mortgage.

2. To assist charities, good causes and community initiatives and allow their members or users free access to the LoanCheck facility, through LoanCheck’s calculator available on the website, (www.loancheck.co.uk)

This project has been developed and refined over the last 6 years, and has involved the collation of data and information from lending institutions, and the development of a computer based assessment process to enable a person to find out whether or not they have been a victim of overcharging.

The initial LoanCheck calculator questionnaire, which is on the website, provides information that can lead to a full audit of a mortgage or loan account and all the reports necessary to pursue lenders. This has been achieved by working with a number of solicitor firms nationally to process and run cases on a no win no fee basis, allowing consumers to pursue potential cases to a satisfactory conclusion without further financial risk to themselves.

John Whittaker

Twenty five years ago, little was known about alternative business finance. Companies needing funding went to their banks and negotiated an overdraft facility. The recession at the end of the 80’s and the banks’ tightening of credit acted as a spring board for factoring. Unfortunately, this generated an image of being the lender of last resort which has taken some time to shake off and, in fact, there is still a general lack of knowledge about the scope of factoring and its benefits – partly, perhaps, because the terminology can be confusing. So before we look at the subject in detail, let’s set the record straight.

FACTORING means selling your invoice to a Factor who will then be responsible for collecting payment of the invoice from your client. You will receive up to 90% of the value of the invoice immediately and your factoring partner will assume full responsibility for the sales ledger.

INVOICE DISCOUNTING offers the same basic facility as factoring in that it provides immediate working capital by releasing cash that would otherwise have been tied up in unpaid invoices, but without the sales ledger and collections service. In this case, your funding partner advances your business cash against the value of outstanding invoices, but you retain the collections in the usual way.

INVOICE FINANCE, RECEIVABLES FINANCE, SALES FINANCE, DEBTOR FINANCE are all generic terms referring to the range of products that release upfront, the cash value of trade debts. Whether it’s factoring or invoice discounting, the basic premise is that the financier provides you with a significant percentage of your debtor book up front, releasing the remainder, less a percentage fee, once the debt has been paid.

ASSET-BASED LENDING is lending against assets on the balance sheet, debts (invoices) are now recognised as one of these assets and therefore funding can be leveraged. Other assets may include stock, plant and machinery and property.

Whichever label is given to the facility, there is always a place for factoring and invoice discounting. These two funding mechanisms have been the catalyst for the innovative and wide-ranging funding vehicles available today and will continue to drive the market forward.

Until recently factoring was considered only appropriate to SMEs and invoice discounting was reserved for medium to large sized, profitable businesses

. It’s still true that factoring is an excellent alternative for small, young or start-up operations. Further, it often makes sense for SMEs to hand over the management of their sales ledger to a third party in return for immediate cash; which may be more efficient and cost effective than hiring a full time employee. This is also the reason larger firms originally dismissed factoring in favour of invoice discounting: whilst they needed the cash, their in-house teams meant they didn’t need the add-on services.

However, with the flexibility of both options their popularity has sky-rocketed, blurring the lines between SME and larger businesses so that both groups have come to utilise the benefits of each.

Beneficial Features include the level of financing being determined by the future potential of a business rather than past performance. Further, both recognise the need for flexibility, allowing funding to grow as the business grows and both are responsive to its changing needs; when compared to the overdraft or loan, factoring and invoice discounting provide open-ended, long-term relationships that don’t come with a fixed repayment structure and the finance is tailored to the specific needs of the business rather than an off-the-shelf package.

Users agree that any costs involved are far out-weighed by the benefits. By providing an immediate injection of cash, they can facilitate growth and development, free up working capital and provide an excellent opportunity to negotiate discounts with suppliers or invest in equipment, people and new markets.

With popularity has come competition and a cross-over of services. Previously, only businesses with a turnover in excess of £1m qualified for invoice discounting. Today, provided a business can demonstrate sound management practices and effective collection of its own invoices, any size company can utilise this service.

As expectations of business owners have increased, so providers have had to respond with wider and more diversified product ranges: bigger clients have meant factoring providers have had to become more professional, better organised and capable of bigger deals, which has driven the factoring industry to evolve and include not just invoice discounting in its portfolio, but broader asset-based lending activities as well.

As businesses of all sizes have embraced the concept of using their assets as a means of funding their operations, invoice discounting has overtaken factoring as a preferred funding mechanism. In June, the ABFA indicated that nearly 48,000 companies in the UK were using invoice finance and ABL funding, and that the trend for larger companies to use the products to help fund mergers and acquisitions was on the rise.

As the market continues to mature, providers are developing strong niches where their customers can benefit from greater added value services by outsourcing their receivables. So, whilst there is a strong demand for invoice discounting, there is still a great need for factoring.

Factoring is evolving as a relationship-based service and it is this approach that has helped providers develop their understanding of specific industries that have historically been outside of their remit. Traditionally, factoring has only been suitable for businesses where transactions are clearly defined – like manufacturing and services. But, as providers become more innovative, they are investing the time to understand how to finance more complicated payment structures, like those prevailing in the construction industry.

Whilst new industry sectors are awakening to the benefits of factoring and invoice discounting, the most powerful attribute these options have to offer is still their service driven approach. They offer entrepreneurs access not only to cashflow but also that most valuable commodity, time. So, as invoice discounting overtakes the overdraft as the primary source of mainstream funding for SMEs, factoring will further develop as a value added proposition, seeking new niches and delivering that invaluable element of time back into the schedule of management teams across the UK.

Evette Orams
Director
Hilton-Baird Financial Solutions
www.hiltonbaird.co.uk

Despite evidence that the economy is continuing to falter - with house prices falling by 2.4% in May - the Bank is concerned about rising inflation, which hit 3% in April as high food and fuel prices took their toll.

“The Bank had little option this month other than to leave interest rates on hold,”

said Ian McCafferty, chief economic adviser at the CBI. “Oil and commodity prices are still of great concern and businesses are having to raise prices as profit margins get squeezed further.”

The British Retail Consortium also backed the decision to keep rates on hold but the Home Builders Federation and the British Chambers of Commerce had pushed for a rate cut.

Progress so far

Since the announcement on 13 May HMRC have been consulting with external representatives to include the IPP Policy team and software developers in order to move forward with the changes required. Rest assured that HMRC are mindful of the employer’s role and any burden they may incur as a result of these changes, and are conscious that relevant guidance will be required in good time.

A major concern was that of implementing the resulting tax code changes; however we have been informed that any required changes would follow the usual budget procedures. For tax code changes it is expected that employers will receive form P7X which usually details the required instructions for such as tax code uplifts etc. There will of course be the need for individual tax codings for any ad hoc uplifts such as T codes. For those registered for e-filing you can expect to receive notification via the Data Provisioning Service (DPS).

Another concern was that of tax and NICs alignment. These changes are not a departure from the plans already in place for tax and NICs alignment.

As stated above we have not had final confirmation of the September date; however that is the date all concerned are working towards. Further consultation will be on-going on a regular basis until such time final decisions have been reached. Your Policy team will keep you informed as soon as we have further confirmation of developments.

For further information please visit www.payrollprofession.org or email info@payrollprofession.org

The aim is to help young people become entrepreneurs and to encourage a change of mindset from a self-deprecating ‘Can I?’ attitude to an affirmative ‘I Can’ outlook. Since the announcement the interest generated across the UK has been incredible we’ve already started receiving applications from thousands of teenagers!

The proposed Academy aims to make a difference to a wide range of individuals at different stages in their careers and with different learning needs. The two key groups of learners and those who will be targeted in the first instance, both fall into the 16-19 age range:

1. Group A will consist of learners who are not attracted to higher education, but who have the clear intention to establish a business or possibly to grow an existing business. They will be looking for a fast track to business start-up.

2. Group B will consist of those learners who are potentially interested in Higher Education, but whose longer-term objective is a career in business – owning or running their own business or seeking a role within a business.

Other target groups will include;

1. Those aged over 19 who are already involved in running a business or aspiring to do so; their objective will be fast-track learning to avoid failure or handle growth.

2. Then there will be those aged 14-16 who are disengaged from adult learning but show enterprising qualities; they would attend short courses at the Academy to raise their aspirations and give them a taste for an alternative route.

3. Finally there will be teachers and lecturers from FE, HE and schools, who want to embed enterprise in their own establishment, or to deliver a course endorsed by the Academy.

When it opens in September 2009, the national hub will be based in the South East, with another to be based in Manchester to open in 2010. The Academy will be made as accessible as possible, spread further throughout England with an online presence, and satellite academies in 7 other regions. I’m keen to make use of the rich expertise of others to develop the NEA as a centre of excellence. I want it to become the beating heart of enterprise across the country pulling together all the strands of other enterprise organisations and developing a unique curriculum that can be rolled out nationwide. We have already had interest from universities who want to involve their MBA students in a mentoring scheme with our younger students – the possibilities for supporting the Academy are endless.

Forming an integral part of the recent white paper on enterprise, the Prime Minister’s support for the Academy has certainly accelerated the project but this is an initiative that I was determined to implement regardless of the support that I received but obviously it is a great deal easier to make progress when you have the support of the PM! This is about revolutionising the way we think, about making education relevant to the real world. We’re going to teach students practical business skills – their talents will be developed so they can go straight out into the workplace and prosper. There are many business colleges in the UK, but none that take such a fundamentally innovative approach to enterprise learning all of the teachers within the Academy will have been in business, they’ll have been there and done it, all the theory the students will learn will be through practical experience.

The first group of graduates will have unique opportunities to enter the workplace, through the web of corporate support that surrounds the Academy. But I hope that many will choose to start their own businesses, and go on to be the employers of the future when the Academy succeeds enterprise will be a viable career option for young people, who will have the confidence to start their own businesses and make their dreams become reality.

Since 2005 when I first appeared on the BBC’s Dragons’ Den I have become increasingly aware of the interest and enthusiasm for business among young people. My office receives hundreds of messages every week asking about every aspect of business from how to patent an idea to how to raise seed finance.

It is very clear that there is loads of enthusiasm out there but it’s desperately in need of direction. Schools just don’t seem to have the resources or willingness to encourage young entrepreneurial talent so I’ve joined forces with the government to launch a National Enterprise Academy.

The aim is to help young people become entrepreneurs and to encourage a change of mindset from a self-deprecating ‘can I?’ attitude to an affirmative ‘I can’ outlook. Since the announcement the interest generated across the UK has been incredible we’ve already started receiving applications from thousands of teenagers.

The proposed Academy aims to make a difference to a wide range of individuals at different stages in their careers and with different learning needs. The two key groups of learners and those who will be targeted in the first instance, both fall into the 16-19 age range:

- Group A will consist of learners who are not attracted to higher education, but who have the clear intention to establish a business or possibly to grow an existing business. They will be looking for a fast track to business start-up

- Group B will consist of those learners who are potentially interested in higher education, but whose longer-term objective is a career in business, owning or running their own business or seeking a role within a business

Other target groups will include:

- Those aged over 19 who are already involved in running a business or aspiring to do so; their objective will be fast-track learning to avoid failure or handle growth

- Those aged 14-16 who are disengaged from adult learning but show enterprising qualities; they would attend short courses at the Academy to raise their aspirations and give them a taste for an alternative route

- Finally, there will be teachers and lecturers from further education, higher education and schools, who want to embed enterprise in their own establishment, or to deliver a course endorsed by the Academy

When it opens in September 2009, the national hub will be based in the south-east, with another to be based in Manchester to open in 2010. The Academy will be made as accessible as possible, spread further throughout England with an online presence, and satellite academies in 7 other regions.

I’m keen to make use of the rich expertise of others to develop the NEA as a centre of excellence. I want it to become the beating heart of enterprise across the country, pulling together all the strands of other enterprise organisations and developing a unique curriculum that can be rolled out nationwide. We have already had interest from universities who want to involve their MBA students in a mentoring scheme with our younger students; the possibilities for supporting the Academy are endless.

Forming an integral part of the recent white paper on enterprise, the Prime Minister’s support for the Academy has certainly accelerated the project but this is an initiative that I was determined to implement regardless of the support that I received but obviously it is a great deal easier to make progress when you have the support of the prime minister! This is about revolutionising the way we think, about making education relevant to the real world.

We’re going to teach students practical business skills; their talents will be developed so they can go straight out into the workplace and prosper. There are many business colleges in the UK, but none that take such a fundamentally innovative approach to enterprise learning all of the teachers within the Academy will have been in business, they’ll have been there and done it, all the theory the students will learn will be through practical experience.

The first group of graduates will have unique opportunities to enter the workplace, through the web of corporate support that surrounds the Academy. But I hope that many will choose to start their own businesses, and go on to be the employers of the future when the Academy succeeds enterprise will be a viable career option for young people, who will have the confidence to start their own businesses and make their dreams become reality.

Here are ten ways to get attitude!

1. Know that you can – Look at how other people have succeeded against the odds. Work out what they’ve got that you haven’t. Go and get it!

2. Know a man who can – Too often, you ask your people to struggle with something they’re not really hired to do. It might save you a few pounds, but it damages attitude. Focus folk on what they do well. Outsource the trivia.

3. Set visual goals – What’s got to be done before you can take the team out for an amazing night on the town? Get brochures, pictures of where you’ll be taking them and put them where they can be seen. Bring goals to life.

4. Accept good advice – Half the world wants to provide business advice these days. Find a good adviser, ideally SFEDI accredited so proven ‘user friendly’ and listen to what they say. Share the challenge; accept good advice.

5. Trust people – Delegating is tough and every boss thinks they can do it best. Give responsibility freely and let people make the job their own.

6. Love mistakes – Children learn to walk by falling over. Adults learn by making mistakes at work. No business makes progress without making mistakes. Accept it!

7 .Passion is proportional to reward – As boss, your reward is the company’s profits and increasing market value. Don’t expect people to be as keen unless there’s something really good in it for them.

8. Money alone does not motivate – Status and recognition are as important as money when it comes to creating attitude. Start by saying thank you, then show it in increasingly tangible ways.

9. Social responsibility creates attitude – Pulling together to paint the scout hut, reclaim a nature reserve, or provide work experience for kids with special needs unites a team. It also shows that you care.

10. Democracy is cool – Sure as boss need to make the big decisions, but let the team make the rest. Does it matter if your van fleet is Mercedes or Ford? Let the drivers do the test drives and make the final choice.
As you can see, attitude is something you grow in house. It’s not something your people can learn on a course. Attitude overcomes barriers; course sometimes highlight barriers. To be successful you need both, but always start with attitude!

Robert Ashton is an author, entrepreneur and social activist. www.robertashton.co.uk

Submitting defective tax returns may suggest that the taxpayer has a cavalier approach to their tax obligations. It may also indicate you are disorganised and so maybe your accounting records are a bit disorganised and may not be correct.

This could lead to costly tax enquiry.

Here are the 10 common mistakes people make when completing the forms.

1. Not using the white space on page 10 – box 23.9 to explain unusual variations.

If you know there is something unusual, explain it. The Revenue are then far less likely to start an enquiry. It is crucial your accountant does this although often it doesn’t seem to happen especially when your accountant is snowed under with lots of returns to prepare.

For instance if your net profit seems too low in this day and age to support someone above the poverty line, be prepared for a plausible explanation. But do not be over generous in the information you give.

2. Entering the same expenses in different boxes each year.

In their haste to get the return filed, many taxpayers and sometimes their accountants do misclassify their expenses on the return.

For example, a driving instructor putting their fuel cost in the cost of sales figure one year and then motor expenses the next will produce large variations that the computer will want further explanations for.

3. Failing to declare or forgetting to include all sources of income.

In the rush for 31 January, it’s easy to omit income sources such as interest being received in the year but the Revenue knows you have an interest earning account. Perhaps an offshore bank account.

Is this where you have filtered away undeclared profits they wonder?

4. Using estimates and round sum figures on the return.

This will fuel the taxman’s suspicion that you do not keep proper records and hence use it as a basis to ask for evidence to substantiate the amounts on the return.

If the taxman can show that balancing figures or estimates have been used or that there are no invoices for some of the expenses, then he will tend to take this as carte blanche to propose hefty additions to taxable profits, often based on nothing so much as finger in the air.

5. Entering the net figure of employee personal pension premiums instead of the gross figure at box 14.11 of the core return, i.e. claiming insufficient relief where higher rates of tax are payable.

Whilst this may not lead to an enquiry, it’s a common mistake that costs taxpayer lost personal cash. It’s worth noting that Gross premium is “net premium” x 100/78.

6. Detailing information on separate schedules or entering manuscript notes on the return i.e. “per accounts” and/or “information to follow” instead of entering actual information or figures on the form.

You might think the taxman already knows and can look it up, but that’s not the way his tax calculation program works. You simply have to supply the info in the boxes he requires.

7. Entering the figure of capital expenditure in Box 3.14 of the Self Employment pages instead of the figure of Capital Allowances, i.e. claiming excessive relief.

This is a common error where the tax payer doesn’t understand the tax rules on revenue and capital expenditures.

As a rough guide the most a Capital Allowance can be is 40% of the cost of the equipment except where 100% first year allowance is available.

8. Lack of greater attention to the following usual suspect expenditure areas:

- Legal and professional expenses
- Repairs and renewals
- Entertaining
- Stock
- Provisions/ accruals
- Research and development
- Drawings

The taxman has been known to raise more enquiries into the above expenses. For instance where drawings are comparatively low, the Revenue may wonder whether there have been undeclared cash sales which have been used to fund your living expenses..?

Also knowing the rules on the other expense categories will ensure that any questions do not lead to a full blown costly investigation.

9. Not showing private use adjustments separately on the self employment pages.

The Revenue will always be looking to disallow any private use of items. So where you have already restricted say motor expenses for private use, you will avoid enquires if you show the adjustments separately rather than netting it off so that it’s clear to the taxman that adjustments have been made.

10. Not seeking help

The Revenue’s campaigns tell us that “tax doesn’t have to be taxing…”
However the task of completing your taxes cannot always be considered straightforward especially where a common oversight can lead to an unfriendly letter from the Revenue.

My advice is to seek help if you’re unsure. In most cases, engaging the right adviser will ensure that your return meets certain quality checks before being submitted.