Sole trader, advance payment

Discussion in 'Accounts & Finance' started by Funkmonkey, Sep 8, 2020.

  1. Funkmonkey

    Funkmonkey UKBF Newcomer Free Member

    29 0
    Hi all,
    I am in the process of completing my 19/20 return. Just before lockdown in March, a company that provides me with most of my work (music gigs) kindly advanced me £1000 as things were uncertain (no seiss announced etc.), this would be paid back through work when things picked up. My assumption is that because the work has not been undertaken as yet that I should leave this out of earnings for 19/20, is this correct?
    My other thing to consider is that the plan was to try to get a mortgage so bumping earnings up for that year was a good thing but since Covid (this year being a financial catastrophe) I guess that is pie in the sky anyway.
    Thanks, F
     
    Posted: Sep 8, 2020 By: Funkmonkey Member since: Feb 22, 2011
    #1
  2. STDFR33

    STDFR33 UKBF Big Shot Free Member

    4,487 1,188
    It’s a balance sheet item so it doesn’t affect taxable profit.
     
    Posted: Sep 8, 2020 By: STDFR33 Member since: Aug 7, 2016
    #2
  3. Andreas Christodoulou

    Andreas Christodoulou UKBF Newcomer Free Member

    3 0
    To be explicit, yes, you should leave this out of earnings. It's basically a loan - not income.

    Also, the banks will take a very dim view of you trying to artificially increase your income!
     
    Posted: Sep 8, 2020 By: Andreas Christodoulou Member since: Sep 2, 2020
    #3
  4. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

    13,216 2,476
    My interpretation of what you've said is that the company gave you a loan if thats the case you cant include that as income. You dont include loans as turnover/income and arent taxed on them.
     
    Posted: Sep 9, 2020 By: MyAccountantOnline Member since: Sep 24, 2008
    #4
  5. Funkmonkey

    Funkmonkey UKBF Newcomer Free Member

    29 0
    Thanks for the replies. I wasn't trying anything underhand in terms of earnings I was simply seeing it as case of either -:
    it being taxable = better earnings for the year
    or, not taxable = pay less tax
    so, win win either way really.
     
    Posted: Sep 10, 2020 By: Funkmonkey Member since: Feb 22, 2011
    #5