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How salon owners protect themselves from HMRC

If HMRC come a knocking, what’s the top things they’ll look at, and how (as a salon owner) are you protected?

We’ve put together a summary below on how Salonfrog’s Clients protect themselves with our help; and it is definitely worth making sure that you have the same controls in place:

What HMRC will investigate:————————— What HMRC is
after:————————————
Your controls:
How you protect yourself from HMRC——————————————————————-
1. Income Are you declaring all your income for tax? i. All your Client sales go through a POS system, which salonfrog independently pulls in to your accounting software.

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ii. Rental income from your self-employed are invoiced independently by Salonfrog.

—————

iii. All income and expenditure is through your business bank account, which Salonfrog independently reconciles to your accounting system.

—————

————————— ———————————— ——————————————————————-
2. Expenditure Are you overstating your business allowable expenses? v. Only business expenditure is paid for through your business bank account.

—————

iv. All expenditure is supported by adequate paperwork (i.e. you scan every bill into hubdoc), which Salonfrog attaches to the expense in your accounting system.

—————

iii. All income and expenditure is through your business bank account, which Salonfrog independently reconciles to your accounting system.
————————— ———————————— ——————————————————————-
3. Payroll Are you reporting
employee wages via RTI (PAYE)?
vi. All your staff are paid via your payroll system, which Salonfrog independently runs for you; and reports to HMRC via RTI.

—————

Are you paying them minimum wage?
Big fines if not.
vii. Staff wages are only paid from your business bank account.

—————

Are you auto enrolling
them when you
should do?
iii. All income and expenditure is through your business bank account, which Salonfrog independently reconciles to your accounting system.

—————

Are tips being declared and tax paid on them? xi. Both you, and salonfrog check minimum wages every pay period.

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xii. Salonfrog independently assesses each employee, every month, to ensure they are correctly enrolled, and paying in the legal amount.

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xiii. You have a Tips Policy, which all staff have signed. Further advice here:

https://salonfrog.com/2021/09/29/tips-hmrc-getting-firmer-with-a-new-employment-bill/

————————— ———————————— ——————————————————————-
4. Self employed

(chair and space renters)

Are your self employed
actually employees?
xi. Salonfrog specialises in understanding the salon rental business, the related legislation, and follow HMRC attacks against salons through the courts; then keep you up-to-date with the latest.

—————

viii. You have up-to-date contracts with all your self employed; the terms of which are actually followed in real life (e.g. they can come and go as they please).
You follow the NHBF/HMRC self employed guidance points (which Salonfrog has distrubuted) and can be found at:
https://www.gov.uk/hmrc-internal-manuals/vat-taxable-person/vtaxper69100

—————

ii. Rental income from your self-employed are invoiced independently by Salonfrog.
————————— ———————————— ——————————————————————-
5.VAT Are you under-reporting
the VAT you owe?
ix. Salonfrog ensures that the VAT relating to all income and expediture is correctly accounted within your accounting system; and that a VAT return is submitted on time to HMRC.

—————

iii. All income and expenditure is through your business bank account, which Salonfrog independently reconciles to your accounting system.

—————

iv. All expenditure is supported by adequate paperwork (i.e. you scan every bill into hubdoc) which Salonfrog attaches to the expense in your accounting system.

—————

v. Only business expenditure is paid for through your business bank account.
————————— ———————————— ——————————————————————-
6.MTD VAT Are you MTD compliant? x. Salonfrog ensures that you are MTD compliant for VAT; especially that there is the required end-to-end digital link in your accounting systems; and that your VAT return is submitted via MTD approved software.
————————— ———————————— ——————————————————————-
7. Records That you keep a copy of all
your records for the
minimum required time?
There are different requirements for different records, for example: for a Ltd company, you must keep records for 6 years from the end of the last company financial year they relate to.

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Salonfrog keeps all your records for the time you’re with us.

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We don’t keep your records from before you joined us though, so make sure you keep these safe.

 

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