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#1
27-04-2010
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Professional racing
Hi, does anyone here claim against their travel, food, 'tools' (car, spares, etc), and other as taxable expenses - or even just claim the VAT back on their race season expenditure at the end of the tax year on their self assessment? Many people regard racing as more a lifestyle than a hobby, and their kit as assets rather than personal belongings, so in this current financial climate we must all be thinking of how to more easily afford our pursuits. Many businesses are 'zero-rated', meaning at the end of the year they haven't made a profit - but that does not mean that they have not been trying to, and who is to say that someone who only breaks even at the end of the tax year should be penalised for doing so - noone pays to work, and we all have to make a living somehow.
Horse racing, for example, is a high risk business that involves huge investment and, in particular, huge entry fees, where one year's champion must be very shrewd not to forfeit his/her year income from one year in the pursuit of greatness the following year. Racing radio controlled cars, contrary to the opinion of detractors, is a scientific and academic study which like other competitive sports often results in the evolution of other aspects of human life - e.g. the lithium polymer battery, which may one day be helping to ferry the masses to their workplaces, the local supermarket, and even into space and beyond. LOL, and i've gone off on one. 
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#3
27-04-2010
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You need to think like it's a sponsorship, not an income. Of course you can be a sponsored driver and not get paid, you can get alot of stuff paid for by your sponsor as long as you are not being paid to drive.
So if you sponsor yourself, like I am Dc and Dc Painting sponsors me, this is ok, well this is what my accountant tells me 
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#4
27-04-2010
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May have to relook at this....
__________________
Dave "Amish FJ" Gibson RB Products ~ Yokomo Nuclear RC ~ Xpert ~ Hacker
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#6
27-04-2010
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Could be I have a really good, or bad accountant haha.
Now think of it this way, I am Dc Painting, I give Johnboy £500 to put Dc Painting on the side of his Banger car, he goes racing down the good ol boys racing track, people see it so, legit advertising right, so I would claim it back on my taxes, this is how I see it.
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#7
27-04-2010
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I wasnt aware you could actually sponsor yourself DC, I know some people who used to sponsor each other for the exact same amount for this reason.
Although then again there is a lot of guys who rally sponsor themselves. A few £100,000 to run a rallycar for sponsorship would take a fair bit off your taxbill at the end of the year!
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#8
27-04-2010
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I don't know what my accountant does, but we all have to trust our accountants. I do advertise as well, I run DC Painting stickers on my cars, and I sponsor other drivers. And I don't spend anywhere near 100k, maybe 60k haha, NOT.
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#9
27-04-2010
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You could get yourself a nice big ex-f1 hospitality unit to pit in! Those where becomming all the craze with the rally guys over here before the recession put them all bust.
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#10
29-04-2010
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DC has valid points. It's more claiming back cost of sponsorship than expenses. You can legally claim back VAT on the cost of such items as fuel and subsistence if you have employees who are out on the road - whether HMRC would view sponsored and semi-sponsored drivers as "employees" when they are at a race meeting is something you would have to discus with them. If they are promoting your business you would have a strong point, but then again HMRC would want to know whether you are paying the drivers a wage, or they are receiving "benefits" from you. Would lead to a whole myriad of questions and probably cost you more in time and effort than you would ever reclaim in VAT........and yes - I'm a sad accountant too...........
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#11
29-04-2010
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I claim ABSOLUTELY EVERYTHING.
I also had a recent VAT inspection that questioned and then ignored it all so as far as I can advice anyone is to claim it and the worse way they say no - for me it works
__________________
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#13
29-04-2010
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#14
29-04-2010
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I asked this question before on a forum & got a lot of confusing replies with a lot of grey areas exposed. One thing was aparent though, if a sponsor pays you money (be it a local shop or a large distributor) strictly speaking you should declare this as income to the taxman.. it's then up to them to decide if you pay any tax or not & that will depend on if you have made a profit or if all your income has gone back into covering your overheads & that will usually depend also on your primary income & how much of that goes into the hobby.
If you are sponsored in parts & spares, technically speaking you won't have to pay tax but should you sell those parts on then you could argue this has become an income & is a very sticky wicket.
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#15
29-04-2010
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I think it's going to be different for different people. With me having a shop, my racing is partly "social" and partly "business". Now I would consider racing at my local track and any sunday meets where I'm not the shop as a combination of social and business, so think I could only claim 50% of my costs via self assesment.
If I attend an event as the official shop, whether I race or not, then that is business and I will claim for everything relating to that, travel costs, meals spares. There is a section on the self assesment form for own use at retail value, so say I use something that costs me £10, but sells for £15, I have to claim the £15 (I think), as that's what I would have gotten had I sold it to a customer. Now, If you're sponsored by a shop or other company on say a full deal where you get everything, I don't think you have to put in a SA form to the taxman. If you get travel expenses, I don't know, but I suspect not as that is your costs, you'd probably just need to give your sponsor the receipts for fuel etc. If you are paid to race, then you're employed to race, and it then depends if you're employed by the company (in which case they do any paperwork). If you're self employed, then you have to do the paperwork. Long answer, but I hope that clears up the issue.
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#16
29-04-2010
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At the same time most "rc racers" have some other means of support, or jobs in which they make and support their standard of living, which is outside of the realm of RC-ing. So my advice would be to consult a financial advisor or an accountant, and a good one and not some shadetree one, or even a tax attorney before considering any such thing - so as to not find yourself oweing a huge tax bill at a later date when a government auditior (that knows their stuff) gets ahold of your folder, and decides that your "hobby pursuit" is really no different than the guy down the block that wanted to deduct all his expenses at the country club for golfing or tennis lessons for his kid.
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#17
29-04-2010
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When i was looking into going self employed, i went to a tax shop & spoke to a couple of accountants who deal with tax issues, they said there was a cut-off figure that you were allowed to earn & not be eligible to pay income tax of around £6000 - i can't remember the exact figure but that is the ball-park, basically if you earn over this figure as paid for working or as a business earning by law you have to pay income tax.
However as i say strictly speaking anything you earn you should declare - even if it isn't taxable income - or at least seek the advice of the Inland revenue to clarify what you do need to declare or not, because if you have a day job & RC becomes a 2nd income or "paid hobby" you will be taxed on your total income. In some cases if you can put your RC income into the bracket to cover the cost of or to recoup some of your out of pocket expences, you may well be lucky & not need to be taxed, but it's best to let the HMRC know then let them decide or at least ask them so they are aware just in case they start chasing you. In with this as well as a self employed person you are allowed to make claims against your tax bill for your "business" expenses, for instance if you need to purchase clothes such as safety clothing or to help your business image when working or chasing up potential income this can be off-set against the figure you pay so basically you can claim the tax money you have spent back.. as well as this you can include travel expences (because you need to travel "to your place of work" & be able to "travel to meet prospective clients & suppliers") add to this tools, clothing, stationary, car repairs etc - basically anything you need to help your "business". so for instance in an RC term you could perhaps say Clothing is a business expense, in that you need to portray an image.. it's no good you going to a race meeting or a show representing your sponsor & turning up looking like a bag of s#*!! by wearing oily ripped jeans & an old t-shirt with holes in.. also the costs of laundry can be added to this & claimed as a business expence - even if you pay your mum a few quid to do your laundry, remember washing powder costs money. I know it is a minefield & this is where it's best to get someone who knows what they are doing to guide you but above all for anything you buy that you can justify as a business expense, get the receipt & keep it in a safe place or store it in a shoe-box along with all the other reciepts & remember things like Duck houses & paying for adult films are not "business expenses" although many MP's & politicians think they are & don't try to fiddle your expenses because if you spent more than you earned the taxman will want to know where you got the extra money from 
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I guess those employed in the trade can, and those that derive an income (the very top sponsored drivers perhaps? not sure)
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