top of page
CMTbannerV2.gif

Here’s why ALL taxi drivers should file their tax returns… even if they TRADED NOTHING!



We have a few clients who didn't trade, or the amount of trade was so insignificant in the year 2021 they were thinking of not filing a return. By either phoning HMRC or heading to the Gov.UK website you may be forgiven for thinking that you don't need to complete a return. But should you do so anyway?


If you are running an ongoing business it is most definitely in your interest to file a return. Many London Cabbies, for example, left their cabs on the drive for most of, if not all of, the fiscal year to April 2021, and only resumed driving once the risk of Covid was understood, and they had been double jabbed, mitigating their risk.

There are two reasons we believe you should file a return for the year 2021.


Firstly, if there are no self-employment pages included in the 2021 return (or the 2022 return for that matter) you will almost certainly receive a letter from HMRC requesting repayment of the SEISS grants within 30 days. This has already started to happen when people have filed their own returns, and instances of this are appearing in accounting forums, as the text below shows.


“Good Afternoon, I’ve received a panicked email from a client who’s received a letter from HMRC regarding potential repayment of the SEISS grants. She was a sole trader in 2018-2019 but went limited in April 2019 so no self-employed income was included in her 19/20 tax return, only the dividends she’d taken from the Limited company...”

In the above text, the client was self-employed in the year to April 2019. They then claimed the SEISS grants during 2020. The problem here is the 3 SEISS grants were claimable in April, August and December 2020, but the 2020 tax return might not have been filed until the 31 January 2021. I believe the questions when claiming the grants were clear, and the client should have realised that they were not entitled to them, however, it is possible in this instance that the client misunderstood that being a Director of a Ltd company is not the same as self- employment.

Ultimately, when the return was then filed, and because there weren't Self-Employment pages included in the return, it has triggered an automatic letter requesting the repayment of the SEISS grants. Grants are often requested to be paid back within 30 days.


This predicament, while slightly different to someone not filing a return because of moth-balling their business during the pandemic, shows that the trigger was the fact that there were no self- employment pages included in the return.


Losses


There is also another and more obvious reason to file your return... Losses! Most small businesses keep their overheads low, however, businesses such as running a modern electric taxi can be many thousands per year. The fact that you have not made much money during the pandemic (or any money for that matter) means you may be thinking you should save some money on accounting fees and tell HMRC you never traded. Apart from the reasons outlined above you should also consider the number of expenses you have incurred during the year. To use the taxi business example, often insurance can be £1,500 plus, Tax Disc can be £500, Meter £160, Plate £110, as well as finance costs which can be in excess of £4,000 in the first year of ownership on a new £60,000 LEVC.

All these costs, plus accounting fees can be claimed as business expenses, and even if your turnover was very low, or even £0, you should consider the fact that carrying these losses forward, back or using them against other income received during that year would lower your tax liability and save you money far in excess of accounting fees.


Comments


Subscribe to our newsletter. Receive all the latest news

Thanks for subscribing!

thumbnail_phonto (1).jpg
bottom of page