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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Hello I have been very stupid and not done my self assessment

Customer Question

Hello

I have been very stupid and not done my self assessment forms for the past 4 years. Just appointed an accountant and getting it sorted now. Thankfully I shouldn't owe too much as I was working as a flying instructor at the time earning very little.

Question: My parents paid for some flight training (approx £12,000 spread over 2 tax years). Is there anyway I can get tax deduction on this?

At the time I did the flight training I was working as a flying instructor. It was training called the Instrument Rating that allowed me to specialise in a more advanced type of instructing.

Could I legitimately say that I plan on paying them back in the future and it was actually a loan?

I have all the invoices for the training costs... Just no evidence that the payment actually came from my account.
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.
Hi.

When you were working as a flying instructor, were you employed by somebody else or were you self-employed? Who were the invoices made out to? Was the £12,000 a gift in effect? Did you parents have any expectation of it being paid back to them? Are you still working as a flying instructor? Did you have any income before you were a flying instructor?
Customer: replied 3 years ago.

I was always self-employed when working as a flying instructor.


Invoices are made out to me.


The £12,000 was effectively a gift but I 'could' always pay it back some day!


I work as an employed corporate pilot now.. Not as a flying instructor.


I used to work in IT before I became a flying instructor but that was in a different tax year and has been sorted with my first tax return.

Expert:  TonyTax replied 3 years ago.

Thanks.

It really doesn't matter where the money came from and if I were you I'd claim it since the point of the training was to enable you to enhance your skills and, therefore, your business which was already up and running. That makes the cost an allowable expense. Had you been an employee or taking the training before you started your business, you would not have been able to claim tax relief for the fees. The invoices are in your name and its not unusual for parents to make cash gifts to their children for various reasons. If you use a cash gift for an allowable business purposes, there is no reason why you cannot claim tax relief for it.

I don't see claiming the expense being a problem even if the invoices were settled direct by your parents. The tax office may ask to see the invoices but unless they launch an enquiry which is possible given how far behind with your tax returns you are they won't ask to see your bank statements. Even if they do, you can prove that your parents paid the invoices direct and that they were not settled from a "stash of cash" you hadn't put through the books so to speak.

I hope this helps but let me know if you have any further questions.

Expert:  TonyTax replied 3 years ago.
Hi again.

I see that you have read my answer to your question. If you have no further questions, would you kindly click on Accept or rate my answer as OK or better so that I get paid. Thanks.

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