Self-employed: no Limited Company-no invoices-no accountant

teemo · Post by **teemo** » Thu Mar 08, 2012 3:10 pm

Hi all. I'd be grateful for any advice on the documents needed to support my Earnings. I'm self employed and do not have a Limited Company or Umbrella Company setup. I guess that makes me a "sole trader". My consulting work in the last 12 months has been for a single organisation. Under my contract of services, I do not submit invoices - I submit a statement of days worked and a progress report every 20 days worked. Also, I do not have an accountant. I intend to manage my own tax affairs and submit my tax as a one-off payment once due.

Documentation I can provide:
- NICs letter and copy of direct debit being withdrawn monthly
- contracts of services
- copy of BACS payment transfer advice slips provided by the organisation I'm consulting to
- proof of the matching amounts being received into my (personal) bank account

Does any know if this would be sufficient, or do I need to scout around asap for an accountant to provide an official presentation of my accounts? If I do have to get an accountant, what else would I need him/her to provide? If the BACS advice slips are not sufficient, I'm sure I could request the organisation to prepare a letter on letterhead verifying the amounts they have paid me under the contracts of service. Would this be worthwhile?

Very quickly at the end - I presume that in calculating earnings for sole traders, it's the gross income that's used and not the income after tax and other relevant deductions?

Thanks in advance, oh wise ones!

Manka10 · Post by **Manka10** » Thu Mar 08, 2012 5:15 pm

as you would know, you need to submit evidence of earnings from 2 sources, bank statements are 1 & 2nd is the accountant's letter on which the accountant confirms the gross (minus operational expenses) & net income. the accountant will normally look at invoices & bank statements to give the letter.

Invoices from yourself cannot be counted as evidence. what is your evidence from second source ?

even if you dont have an accountant, just go to 1 & ask them you need a letter in specific format. they will charge anything between £30 - £100 depending on where you are.

Letter from accountant is a crucial piece of evidence for self employed individuals

sshah20 · Post by **sshah20** » Thu Mar 08, 2012 6:51 pm

Only net profit ie. Gross profit less (operational expenses and tax) will count as earning.

teemo · Post by **teemo** » Thu Mar 08, 2012 8:55 pm

Manka10 wrote:as you would know, you need to submit evidence of earnings from 2 sources, bank statements are 1 & 2nd is the accountant's letter on which the accountant confirms the gross (minus operational expenses) & net income. the accountant will normally look at invoices & bank statements to give the letter.

Invoices from yourself cannot be counted as evidence. what is your evidence from second source ?

even if you dont have an accountant, just go to 1 & ask them you need a letter in specific format. they will charge anything between £30 - £100 depending on where you are.

Letter from accountant is a crucial piece of evidence for self employed individuals

Thanks @Manka10. I was wondering whether the BACS payment advisories (electronic 'payment slips' from the organisation to advise that it has transferred money to my bank) would count as a second source. I've never seen anyone else mention them on this forum, so I think you're right and it might be worth getting an accountant letter even if I don't plan to use one to manage my tax affairs. I'm in London, so should be able to find one easily enough. Thanks for responding!

teemo · Post by **teemo** » Thu Mar 08, 2012 8:59 pm

sshah20 wrote:Only net profit ie. Gross profit less (operational expenses and tax) will count as earning.

Eeek! Tax too? Really? I was hoping that as I'm an individual, not a company, I could get away with claiming the gross amount the same as you do if you're an employee. If this is not the case, I may have trouble meeting my income threshold. Can anyone else confirm the advice from @sshah20??

Manka10 · Post by **Manka10** » Thu Mar 08, 2012 9:15 pm

Gross income (after deducting only operational expenses) can be counted as earning. UKBA considers earnings before tax

payment advisories are essentially from bank again, no point in including them as you already have statements. they are definitely not pay slips

teemo · Post by **teemo** » Thu Mar 08, 2012 9:25 pm

Phew, that sounds better. Thanks @Manka10.

Is anyone else reading this post in the same situation as me vis a vis self-managed non-company accounts? Particularly anyone who has had an application approved...

Manka10 · Post by **Manka10** » Thu Mar 08, 2012 9:28 pm

teemo wrote:Is anyone else reading this post in the same situation as me vis a vis self-managed non-company accounts? Particularly anyone who has had an application approved...

that wud be me mate, UKBA didnt return my accountant's letter, dunno why

teemo · Post by **teemo** » Thu Mar 08, 2012 9:34 pm

Manka10 wrote:
teemo wrote:Is anyone else reading this post in the same situation as me vis a vis self-managed non-company accounts? Particularly anyone who has had an application approved...
that wud be me mate, UKBA didnt return my accountant's letter, dunno why

Aha, then you have now become a super-powered guru in my eyes. Thanks again for all the advice!

teemo · Post by **teemo** » Thu Mar 08, 2012 9:55 pm

@Manka10 Another couple of quick questions (and I hope this isn't boring other forum readers). Were you also in a situation where you didn't have invoices to help prove your self-employed status? The standard set of docs required seems to be:

- Business or company accounts (profit & loss and balance sheet)
- Accountants letter (I'm not sure what this would need to contain if you have accountant-prepared P&L accounts??)
- Invoices
- Bank statements
- UTR reference letter and/or proof you have paid all your Class 2 NICS

I have the last two, and can get the first two, but don't have the third. I'm hoping that's okay, as my contracts clearly state that payment is not invoice-driven, but I'd still be more comforted if you or someone else could confirm they were in the same boat.

Manka10 · Post by **Manka10** » Thu Mar 08, 2012 10:35 pm

if payment is made without any invoices then how do they know what amount to pay ? Accountant will surely need invoices to give a letter

teemo · Post by **teemo** » Fri Mar 09, 2012 8:24 am

Manka10 wrote:if payment is made without any invoices then how do they know what amount to pay ? Accountant will surely need invoices to give a letter

The contract of services is based on a day rate and is paid at intervals of 20 days worked, therefore its a set amount each time I submit the paperwork. The documentation I need to submit to the company is a statement of days worked (signed by the project manager) and a progress report. I could provide all this to the accountant.

Manka10 · Post by **Manka10** » Fri Mar 09, 2012 9:19 am

teemo wrote:
Manka10 wrote:if payment is made without any invoices then how do they know what amount to pay ? Accountant will surely need invoices to give a letter
The contract of services is based on a day rate and is paid at intervals of 20 days worked, therefore its a set amount each time I submit the paperwork. The documentation I need to submit to the company is a statement of days worked (signed by the project manager) and a progress report. I could provide all this to the accountant.

I suggest you generate invoices going back till the time you are claiming income for extension. give the invoices to your clients as well. You dont need to get them signed from anyone.

this will simplify your paper work a bit or it can take longer for UKBA to go through your documents

teemo · Post by **teemo** » Fri Mar 09, 2012 4:20 pm

Good advice. Thanks!

village · Post by **village** » Fri Mar 09, 2012 8:49 pm

1) UTR reference letter from HMRC
2) proof that you have paid your Class 2 NICS by direct debit or any source
3) gross and Net income letter from accountant
4) profit & loss letter from accountant
balance sheet and accounts
5) summary letter stating the payment dates into the bank account
6) Invoices
7) personal Bank statements or Business account(if any)

teemo · Post by **teemo** » Fri Mar 09, 2012 10:29 pm

Having the list is very helpful. Thanks @village !

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Self-employed: no Limited Company-no invoices-no accountant

Self-employed: no Limited Company-no invoices-no accountant