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Sam
Sam, Accountant
Category: Tax
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In relation to tax credits: I am a self employed musician and

Customer Question

In relation to tax credits: I am a self employed musician and as such declare quite a low income each year, this income has been rising but it is still low enough to receive help from the Government through Child tax credits which got to my wife and Childcare Tax credits which also go to my wife.
I keep pretty good records, but expenses for musicians are quite a controversial area and what has always concerned me is that if there was to be an investigation into our accounts and we had made mistakes in our calculations then the HMRC would want money back.
Can you advise me what would happen in such a circumstance?
Submitted: 10 months ago.
Category: Tax
Customer: replied 10 months ago.
wondered if there was any case law that existed on this?
Expert:  Sam replied 10 months ago.
Hi
Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer (and I am ex HMRC and now run my own accountancy business)
Even in your line of trade, the appropriate expenses are never controversial so could you expand on what you have been claiming that you feel sits in this position?
Thanks
Sam
Customer: replied 10 months ago.
Sure. You are right. My expenses are the normal ones, travel, some food, a proportion of rental cost set aside for office space in my home. Mileage as well. I think what worries me is that I am not particularly good at accounts ( I am a musician not an accountant) and what would be the situation if I were to have made a mistake. I don't think it would be massive but still there is a chance, Does that make sense. I.E. In terms of Tax Credits how does the HMRC treat accountancy mistakes as opposed to untruths?
Expert:  Sam replied 10 months ago.
Hi
Thanks for your response
Food is not allowable as we all have to eat to live - unless it involved an overnight stay in the line of the work (then an evening meal and breakfast the next am would be a;allowable)
Costs for the room are allowable if you conduct lessons in that room - but I imagine much of you earnings perhaps come from gigs - so you work out of the home - so just make sure what you claim is for a room ONLY used for business and represents the actual time it is used for - or you can claim a set £3 a week
Mileage is allowable, as would be advertising, and insurance and perhaps some telephone.mobile costs and any costs to keep your instruments/equipment in good order (all of which should be restricted should there be any private use and if more than one of you incurred the same cost)
And the purchase of any instruments (capital allowances) or used instruments that you introduced into the trade - again restricted for private use
They would be the main expenses - let me know if you wish to to look at any one expense and how you have claimed it.
And if HMRC find a mistake - and they instigate the looking at your tax affairs then there would usually be tax due if they found anything over claimed along with a penalty but they would accept that you were not a experts and made a a mistake rather then deliberately set out to commit fraud.
But of course this could all then impact on tax credits too.
Let me know if I can assist further
Thanks
Sam
Expert:  Sam replied 10 months ago.
Hi
Please could I ask whether you require any further assistance.
if you have all you need, then please do rate me for the level of service I have provided (or click accept) as this ensures that Just Answer credit me for my time
Thanks
Sam

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