Below are the most common questions we have been asked regarding tax and accountancy. If you cannot find the answer you are looking for, please click here to contact us directly.

This is the faq section for entertainers

• I have just become an actor.
  What expenses can I claim against my tax?

  There are many expenses that can be claimed against taxable income. Everyone runs their business in a different way and they will usually incur some expenditure that is particular to them. By law you can only claim expenses that are incurred Wholly and Exclusively  for business purposes. So items that are exclusively related to your self employment should be allowed  eg advertising, accountancy fee, agent fees/commission etc
  
  However many expenses may have a ‘dual purpose,’ ie, they will have a business and a personal element and as a general rule you can only claim the business proportion of such items providing you can ascertain a business element.
  
  The following list is not exhaustive but gives an indication of the general expenses that may be  claimed by an Actor depending on the individual circumstances of the claim:
  
  •    Agent / Manager fees and commission
  •    Travel & subsistence on tour if supporting a permanent home
  •    Costume & Props
  •    Laundry & cleaning of costume & props
  •    Travelling and expenses attending interviews and auditions
  •    Postage & stationary.
  •    Computer consumables.
  •    Bank charges on a business account.
  •    Telephone/mobile phone charges.
  •    Accountancy charges.
  •    Equity subscriptions
  •    Advertising eg Spotlight and agency books
  •    Theatre and cinema tickets relevant to your self employment
  
  If you have expenses that are not on this list you may still be able to claim them.
  
  Keep a full record of ALL expenses and discuss them with your accountant. They may be tax deductible

• I have just bought some new clothes for work. Can I put this cost through my accounts?

  Possibly. If your clothing is protective or it has a business logo embroidered on it, the cost of buying these items could be claimed. Also, cleaning costs may be shown in the accounts. The clothing is clearly identifiable as work wear, and is ‘wholly and exclusively’ used for the business. You would not wear it other than for work. However if you bought ordinary, everyday clothing from, say, M & S the answer is "No". Under current legislation these items are regarded as having a dual purpose. You could wear them outside of work. They would therefore not be classed as tax-deductible expenses.

• I have recently been undergoing a course of physiotherapy on a bad back. Without this treatment I would not be able to work. Can I include these costs in my accounts?

  Unfortunately, the answer is probably not.
  
  This is based on the test case ‘Prince v Mapp [1969], in which a professional guitar player (who also played it as a hobby) cut his finger. The injury did not heal and in order to resume his career he underwent surgery. Unfortunately the judge in the case found there was some ‘duality of purpose’ to the surgery - it would allow him to also resume playing his guitar as a hobby – and thus the cost did not satisfy the ‘wholly and exclusively’ test.
  
  It would be very difficult to satisfy the ‘wholly and exclusively’ test, and this is an argument HMRC would most likely pursue. As always you should discuss such items with your Accountant.

• I am worried that my bookkeeping records would not stand up to a tax investigation. What records should I be keeping?

  You should keep comprehensive records with supporting receipts.
  
  Anyone who has undergone an investigation will know that HM Revenue & Customs can spend months looking through your records, asking probing questions and wanting what might seem as meaningless information about your business affairs. This can be both time consuming, stressful and very expensive – not just in terms of tax but in terms of lost lessons due to the time spent dealing with any investigation.
  
  Prevention is of course better than cure.
  
  One recommendation is to have a separate business bank account. If a credit card is preferable, then again, separating business and personal transactions into two separate cards could be helpful.
  
  Separating your business and personal life will not only help your accountant but it will also help in the event of an HMRC investigation.
  
  There are three general forms of transaction to record:

  • Bank transactions, including payments from and deposits into the bank. 
  • Cash payments and receipts
  • Credit card payments

  When deciding on how to record these transactions provision should be made to identify which receipts / payments are cash, bank or credit card. For cash receipts, it is important to identify any cash not deposited in the bank but used for sundry cash expenses or general living expenses.
  
  Personal drawings from the business should also be easily identified. One area HMRC looks at is funding of personal expenses. If you have separate business and private accounts, either make transfers between accounts or write yourself a cheque from the business account.
  
  Mileage records are also important. Even if you use your car almost exclusively for business some form of record should be kept to validate this. HMRC are keen to challenge business mileage where records are not complete.
  
  One method is to record your car's total mileage at the start of your accounting year and only record your private journeys made during the year. At the end of the accounting year, work out the total mileage and deduct the private mileage. The difference is your business miles.
  
  If you do not have sufficient evidence to support your business expenses then an investigation can mean an increased tax bill. HMRC may also make similar adjustments to the previous year’s tax bills, add on interest charges and impose penalties.
  
  Please also bear in mind that bookkeeping records and supporting receipts should be retained for 5 year 9 months after being submitted to HMRC.