Late night caffeine/stress-related response:
Re reg 30/38 of HB My initial posting was to give Sue some general ideas about s/e and was not a comprehensive statement of the law (The value of your capital may go down as well as up. Not for resale as a single unit). I'm not sure about your argument about negligible income followed by mega bucks. If someone makes a loss of £1,000 in the first 10 weeks & a net profit of £3,000 in the next 10 presumably you would say their income is £3,000 over the last 10 wks = £300pw = tap all HB. I'd say £2,000 over 20 wks = £100pw = in with a shout for HB. When did all this £3,000 come in? Was it all earned in the 2nd 10 weeks, or was it payments from work done in wks 5,8 and 9? Did the £560 that they received in wk 13 come from stock they bought in wk 5? (In which case why not start the assessment from that week?) Did they buy stock in wk 1 and are going to have to buy another £1,000 worth in week 21 (when they have to look after a sick relative so can't work?) If that's so, their earnings over 11 weeks are £2,000 (£181.81 pw). How will gardeners, ice-cream sales people and Avon reps be assessed? Will the first 2 lose entitlement in summer (depending on the dryness or wetness, or dead lawns?)and the last in the 2 months' before Xmas (obviously they'd have to a damn good rep)? If someone loses £5k in 1st 6 months and makes £10k in 2nd 6, don't HMRC assess them in the following year on £5k? If so, how can a DM say they earn £20k a year? How come Sue can't pick the assessment period to suit her client, but the DM can to suit themselves (sorry, what I meant is how come the DM can be more objective than the person's accountant)? At what point has someone's earnings become typical and representative? Most business accounts software and those Simplex D style account books give cummulative info anyway. I think there is enough caselaw outwith HB that could be applied and a good case argued about accounts in general to support the above.
Now, if someone breaks a leg so has to employ someone to keep their window-cleaning round going, and so makes little profit due to paying wages, that's a significant change, and I believe re-assessment would be appropriate from when they broke their leg (It's in DMG somewhere).
As to 'use of a room expenses', somewhere in DMG is something about using an electric sewing machine and a heater in a room as an allowable expense. It's difficult not knowing the particulars of the case above, but, if they've got a pc in a study that they need to keep warm and lit to do work, then a small portion of their energy costs could be apportioned to the business. Also, if they're, eg, a milkman or Avon rep, then they would be entitled to offset travel costs. If they run a taxi, hey, now we're talking. If they have to get stock from a warehouse, then that's business use. how about a mobile hairdresser? I once assessed a pigeon trainer(!) Pigeon fanciers (not illegal apparently)used to pay him to drive their pigeons to remote spots and let 'em go for training purposes. I allowed him motoring costs (and some for cleaning spray too).
Then's there's the interest on business loans (but not the loan), replacement of worn out equipment (but not depreciation)...and don't get me started about farmers and livestock.....but hey, I've gone on far too long and the caffeine's wearing off (thank Buddah).
Accountancy is an art, not a science, and I would argue all of the above if it were to put my client at advantage in claiming any benefit.
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