Re: Re: Parcelforce fees

["Mal Lansell" <mlansell@xxxxxxxxxxxxxx>]

Well my wife might be able to justify a computer "upgrade" as a
legitimate
expense for her medical writing busines, but it might be a bit harder with
telescope parts!

Mal



----- Original Message -----
From: "Graham Howe" <graham@xxxxxxx>
To: <ukha_d@xxxxxxx>
Sent: Wednesday, October 20, 2004 1:42 AM
Subject: RE: [ukha_d] Re: Parcelforce fees



> £23.01 is what I have to invoice. £13.01 goes in tax, and £10.00 goes
> to the retailer....
>
> 1: The CD costs £10 + vat
> 2: I have to pay £11.75 including VAT to the retailer
> 3: I pay 40% income tax, so I have to earn £19.58 before tax to be
> left with £11.75 in my pocket.
> 4: I have to charge my clients VAT, so I have to invoice £23.01 to a
> client in order to buy a £10 CD.

Actually it's worse than that if your company is subject to IR35 or if you
are paying National Insurance, I always used to bank on at best 50% take
home from invoice excluding VAT.

Or of course you buy the CD through the company ;-) in which case the sums
look a bit like this....

1: Pay the retailer £11.75
2: Claim the £1.75 back from HMCE
3: The £10 is seen as a purchase and therefore is taken 'above the line' in
the company accounts therefore reducing the corporation tax by 30% (or
whatever current small company tax is) of its value = £3.00 back
4: 'Extra' £3 taken out of the company as dividend so 40% of that goes to
IR
5: Net result, client charged £11.75 inc VAT, company gets a CD in its
inventory and I have £1.80 in my pocket

Of course technically my company owns the CD (hmm, wonder how to depreciate
it!) and for my wife to use it might constitute a benefit in kind, but
that's a couple of minor points in this purely hypothetical example that I
couldn't possibly condone ;-)