I know someone who has just opened a hairdressers, and is offering an initial 20% discount to get trade in.
Can this be offset against tax in any way, akin to marketing expenses ?
Could the cost of printing flyers be "upped" to take into account the "loss" caused by the discount given by anyone who takes advantage of the offer ?
The sales would be 20% lower as a result, so you get your tax relief that way.
its automatically offset against tax if there's 20% less income.
This would be the same as having the full amount and then "offsetting"
20% of it as a marketing expense, surely ?Phil
Hmm, I see your point... thanks for the responses !
Your net sales are after discount and that is your revenue.
One thing your friend should consider is the VAT threshold. It hits hairdressers very hard - at £58k they will take an immediate £8,638 hit with the with the next penny and will have to wait until they earn £68,150 before they are back where they were at £58 (give or take the odd bottle of shampoo).
There are special rules that allow them to split their business ISTR (although the HMRC site as usual is not forthcoming), otherwise they will find themselves in the position where they can make more closing for one day a week than they can make staying open!
Here we go then:
"In January 2003 the High Court held that self-employed stylists who occupied space in and used the facilities of the taxpayer's hairdressing salon in return for a fee under "rent a chair" agreements were supplying their hairdressing services direct to customers despite the fact that the contractual structure between the taxpayer and the stylists did not come within the Federation guidelines. It was held that the salon was not required to account for VAT on the consideration received from customers. (Kieran Mullin Ltd v C & E Commissioners. See also CCH Indirect Tax News"
Probably want a bit of planning right now.
In message , Troy Steadman writes
The short answer is you can for any business so long as you plan it properly and it is for any reason other than to avoid paying VAT. Doesn't work for solicitors though because the "etc" you've missed out:
..law society registration, separate client accounts, separate audits...
It is very common in a solicitor's office to have desks for self-employed costs draftsmen, tax specialists and other people who look as though they must be employees but are semi-qualified or even unqualified "experts".
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