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Hi,
This is not a question that’s likely to come up in the exam, but my friend asked me yesterday for some advice, and I couldn’t think of how to answer it, so hoping someone here can.
Basically, he works as a freelance musician (like myself), but he is set up as a company. The other day he did a one-off teaching job. The college has already paid him, but has deducted tax at source (I’m guessing at the rate of 20%), and they also deducted national insurance. What is the normal accounting procedure for this scenario, so he doesn’t pay tax twice?
Also, he is VAT registered (flat rate), and he said something about education being zero-rated or exempt, and he wasn’t sure whether he should send them a VAT invoice or not. Does anyone here know the answer to this?
Thanks for your help.
There are two things here to be considered.
1) income tax: – if your friend doesnt have any other income. I would suggest that to just file a self assessment return. Even though there wont be any penalty, since tax due would be nil.
2) As you have mentioned that your friend has set up a company, it would be better to send a VAT invoice to them for there records, even if service is zero rated.
Hope it helps.
Raj- Topics: 0
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Company – he has to notify hmrc 12 months from the end of accounting period in his Company becomes liable.
Vat it is a flat rate no need to prepare reurns
Individual – he has to notify hmrc on 5th october following the end of the tax year the source arose i.e in as far as his dividends are concerned.
The Tax suffered at source (from teaching) is normally called PAYE.but for preparation of self assessment he needs to get a copy of P11 from his employer to enable prepare his tax returns which is normally given to him by 6th july following end of Tax year
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