Urgent Projection for self employment

[Rainbow]

Hi All

Thanks for this valuable forum I don't know what I would do without it I have found some many answers to my questions just by searching, but I can't find the answer to this question.- Our IP has asked us to prepare a projection month by month from 2007 - 2008 of income and expenditure as we have never done anything like this before we don't know where to start or how to lay it out. Currently our IP has a spreadsheet which we keep from the start of the new financial year hubby has a full time job and he is also a musician which he has always declared to the Inland Revenue since the age of 16. On our spreadsheet we write down the pub Town and fee also the mileage and then have an expenditure coloum - So trying to guess what venue's he will play is very hard and what mileage he will do etc.
So instead of writing down pub mileage etc (Unless of course if we know them) do we write 3 X pub gigs guess the mileage and expenses. Can anyone help with this please - Our IP wants this by tomorrow!![:(]

Thanks in advance[:)]

[MelanieGiles]

Hi Rainbow

With any self employed business, preparing trading projections are always "finger in the air" even for my accountancy practice!!! But what you can do is make a best guess.

For a small, simple self-employed second income, I am surprised that your IP wants something as elaborate as a month on month forecast. I would have thought a simple, forward trading statement based upon last years accounts for your husband would have been sufficient.

If they insist on a full trading statement, try and work out the number of gigs on average he does per month, calculate average mileage and other costs - identify peak times of the year - perhaps Christmas and summer weddings, and try and put somethibg together that is similar to last year's results.

Hope this helps - and don't forget that your IP is there to help you! In reality, I always assist my clients with putting together their trading projections, unless they have their own accountant of course.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Rainbow]

Hi Melanie

Many thanks for your valued response and so quickly. I think the IP wants it because he mostly breaks even but when we file his self assessment tax return it makes a loss because of the written down values for instruments, if he does make a profit it has only ever been small £100's Max £275.00. When I had the intial telphone consultation with an adviser she asked me what is the minimum he would get on average a month I told her that it would be in the region of £60 per month, when the nominee who is preparing the proposal rang me and asked for this I said I didn't know how to do this and his advice was to prepare the forecast showing a profit of £60 per month after taking into expenses but in reality as the tax return shows he doesn't make a profit he just breaks even, I tried to explain this and admit that I ended up in tears as I didn't feel he was listening to me and kept saying he has to show the creditors why he is continuing with a business that is making a loss. I tried to explain that for musicians it is more like a hobby that they happen to get paid for. We have never lied or put in false accounts to the Inland Revenue and I feel that by saying we are making a profit when we are not will show when we do the end of year tax returns and then the Inland Revenue will start an investigation, which would be OK from the records point of view because we don't do anything we shouldn't but all the extra stress it would cause I don't know if I could cope.
Sorry for rambling on but this is really worrying me.
Thanks again for your help.

Best regards
Rainbow

[MelanieGiles]

Hi Rainbow

Sledgehammers and nuts spring to mind here. If your husband has a hobby, which is self-funding and non-profit generating, then I do not personally see why you are having to produce detailed accounts for it at all. Why not suggest to the IP that it be completely left out of the IVA, as the figures you quote are immaterial, but that at the end of the year you will produce accounts, and if there is a profit showing that you will pay over 50% of any additional monies earned based upon the submissions to HMRC.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Rainbow]

Thanks Melanie you are a star! I will try again with them and see what they say - I think it may have been because we have an 1K overdraft on a business account which we set up to try and use it like a business but it never really happend (At the time he was testing the water to see if he could do music full time - But there just isn't enough money in it, unless of course you are Jamie Cullam!)I did say to the IP that maybe we could try and find the 1K to clear the overdraft but he said I couldn't do that. Do you think its because of the overdraft?

Will keep you posted - Thanks again
Rainbow

[MelanieGiles]

Rainbow

Your IP is right in that the overdraft must be included within the IVA.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Rainbow]

Melanie - Just to say a huge thanks your are really a treasure - I emailed the IP with your suggestion Quote Why not suggest to the IP that it be completely left out of the IVA, as the figures you quote are immaterial, but that at the end of the year you will produce accounts, and if there is a profit showing that you will pay over 50% of any additional monies earned based upon the submissions to HMRC.End of Quote

They have phoned me this morning and have agreed to this
Thank you so much Melanie it is a huge relief
Rainbow

[MelanieGiles]

Glad to be of assistance!

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk