what are the do’s & dont’s of moving into new premises?

[John Gregson]

At £250 per month its not worth discussing – Take it fast before someone else does. As for the rates, if he’s charging you all inclusive ask to have it itemised on the invoice he gives you.

Cheers John

[Graeme Speirs]

thanks John, to be honest I think hes looking for the cash to change hands at the end of each month, it would be a fairly "loose" agreement, not ideal I know but the price is good, not sure whats the best route as want to make sure Im not be totally illegal ie: not sure I would be getting an invoice etc?

cheers
graeme

[Peter Dee]

Be careful on the rates issue. If he’s saying it’s included then it can only be part of his existing business.
When you apply to the Post Office for a mailing address, they won’t give you one until you are registered with the Council, and therefore liable to pay rates.
The only way round not paying rates initially is to have all your mail delivered to the existing landlords address (as opposed to SMedia Signs in the garages).
Then the landlord (presumably on site) will pass over any mail.

[Martin Pearson]

I would have to agree with John at that sort of money it’s a no brainer Graeme. Have a search about on the boards because this has been discussed quite recently.
As for Rates just make sure your Landlord gives you something in writing to say they are included, should be in the lease agreement stating everything you are responsible for and what the Landlord is responsible for.

Not sure that fitting on site is unprofessional though, some of the time it is more convenient for the customer for you to go to the customers site for fitting rather than them bring a vehicle to you.

I don’t have a problem with people working from home if that is what they want to do but I do think at some stage you have to decide where you want your business to go and on many occasions the only way for the business to grow is to take on some sort of premises. With such a low monthly payment it at least gives you the chance to test the water, if things don’t work out for some reason then it’s not going to cost you a fortune.

[Gary Birch]

While £250 sound very attractive it sounds like a very loose agreement and would tread cautiously.

I think I would want the invoice and some kind of formal agreement.

Cheers

Gary

[Martin Pearson]

Graeme, having read your second post I would be a bit more wary, if he is looking for some sort of cash arrangement then you will have no protection at all and what happens if he decides to chuck you out after a month or two.
Plus how do you account for the £250 you are paying him for the unit?

[Karl Williams]

Don’t do it if you don’t have an agreement. No agreement means he can do anything he wants like entering your business without your consent.
fail to pay on time and you’ll find yourself locked out.
Find somewhere else mate and pay the extra for peace of mind.

[Graeme Speirs]

at that kind of price I think I will probably take it for storage alone initially and then over the summer I can kit the place out. re postage its not a problem really as my current address sounds pretty good and the post can come here (very minimal post I get anyway). I suppose the best way to describe the premises is that it would be a workshop. I wouldn’t plan on being there strictly 9-5pm as I like doing my design work at home, thought I could put a notice on the door giving mobile contact details? Also save costs initially by using home broadband and divert my exisitng number to my mobile (as I do at the minute).

Basically would go there as and when required. Its not the type of area where Im going to get folks turning up at the door (do I really want this anyway ie boy racers etc!!!)
I can stomach £3k per annum and I think it could be a stepping stone to something bigger maybe 2-3 years down the line.

graeme

[Peter Dee]

I’m paying £250 PM for 50 sqm (540 sq ft). No lease but on a yearly licence.
Rates not included.
Cash in hand is definitely out.
No rights, no records, no security of tenure, probably no planning and illegal if not billed.
Sounds like the guy wants it both ways. Earnings from rent and not paying tax on it.

[Graeme Speirs]

cheers guys I will speak to him about an agreement, you get a vibe/gut instinct for someone and he seems very genuine, I also play football with his brother and fairly good mates with him, Im doing him a favour too as its been empty for a while, hes been asked by mechanics etc to use it but hes said no due to the potential mess and noise. Obviously a sign business is pretty "clean" to him. Just think I need to iron out the rates/agreement side of things as its all new to me.

all these responses are helping me tho so cheers…keep em coming!

graeme

[Graeme Speirs]

the total size in terms of floorspace is 16ft x 50ft x 10ft tall also with a courtyard/driveway type area which i can use for vehicles also (this is outside but will still be very handy I reckon).

How do I work out the total meterage to see how that compares? Doh!!!!!

😳

cheers
g

[Hugh Potter]

16x50ft = 800 sq ft,

divided by 10.89 sq ft to a sq mtr = 73.5 square metres +/- a tad.

wish i could find something like that local, but with some decent passing traffic! think i’ve seen ‘just the unit’, but it’s £9k + rates.

😕

[Peter Shaw]

quote :

you get a vibe/gut instinct for someone and he seems very genuine

No doubt you do but ask most people who have ever had a business partner and they’ll say "never again".

While I know he’s not a partner this is still business and you need to keep the ability of separating social and business. Any fall out would be bad for you the way you seem to want to go.

Also think about how you are going to deal with rent on your accounts if it’s cash in hand. You are actually losing out and he is benefiting from the evasion.

I think it may be worth offering him more, even enough to cover his tax avoidance, to put it on a contractual basis, protect yourself and make it legal. You’ll still have a good deal.

Finally watch out – after all the tax man could be reading this thread!!

Peter

[Graeme Speirs]

peter/hugh,

thanks. Yes def will be going down the official route and put the onus onto the landlord as he is keen to have a good tennant ie me so its in his interests to have the place and agreement 100% legit:) also just spoke to my accountant (best friend) and his advice was pretty much as has been mentioned on here. 800sq ft, that does sound pretty good for the price when i hear it like that! From reading other threads on this the one thing Im missing out on is passing trade, do you guys view this is very important? I only ask as theres another place potentially going for £500 plus rates but with some decent signage it would be very eyecatching and is bang in an industrial estate with say 75-100 small -med companies on the potential doorstep…DILEMMA !!!!!

Cheers

[Jon Marshall]

You’ll get loads of work from the industrial estate.

[Peter Dee]

I have no passing trade as I’m on a farm. I get the odd visitor, either existing customer or new enquiry who has been in touch first.
Mostly I go and visit where the signs will be installed.
Van work I often don’t even meet the customer until I go on site to do the job.
I have heaps of outside space and can use an open barn if raining.
My business is not aimed at passing trade but business signage where I need to do site visits. I think it’s when you dip in to t-shirts, sublimation and the like where a street presence would be better, but of course you then pay more.
Another thing with street premises is you have to be open. Closed signs being repeatedly hung up due to working on site don’t go down well.
As for doing vans at the workshop, some I do but customers much prefer them being done on site, which I don’t mind but not on the side of the road!
I certainly wouldn’t take on £250 PM just for storage and carry on working from home.

[Craig Bond]

What is the security on the premises like – for insurance purposes?? You have security of equipment to consider.

Most insurance companies are very strict on security i.e type of roof, number of doors, type of door lock, alarm system etc.. etc..

You could find yourself paying through the nose.

[John Childs]

I don’t understand why there should be a problem with the taxman if Graeme pays his rent in cash.

All he has to do is itemise it in his accounts, who it was paid to, and how much. He is then free and clear. It is a legitimate business expense regardless of paperwork.

Any tax problem will belong to the landlord, not Graeme.

[Peter Dee]

quote John Childs:

I don’t understand why there should be a problem with the taxman if Graeme pays his rent in cash.

All he has to do is itemise it in his accounts, who it was paid to, and how much. He is then free and clear. It is a legitimate business expense regardless of paperwork.

Any tax problem will belong to the landlord, not Graeme.

John, how can he enter the rent in his accounts without a receipt?
That would mean that a business could make up what they like as far as outgoings. There’d be no proof that he wasn’t pocketing it himself as the landlord would deny it if caught evading tax.

[Peter Shaw]

quote :

Any tax problem will belong to the landlord, not Graeme

Not if he knowingly colluded, John. I think it also possible that, if caught, the taxman would make a reassessment at market rates.

Basically if you want to stay legal and don’t have a receipt, be an MP !!

Peter

[Gary Birch]

quote Peter Shaw:

Basically if you want to stay legal and don’t have a receipt, be an MP !!

Peter

:lol1: :lol1: :lol1:

[Peter Dee]

I always thought MP’s as being the other way round – illegal activities for which they DO have a receipt (for their dubious expenses etc).

[John Childs]

quote Peter Dee:

ohn, how can he enter the rent in his accounts without a receipt?
That would mean that a business could make up what they like as far as outgoings. There’d be no proof that he wasn’t pocketing it himself as the landlord would deny it if caught evading tax.

Easy. Just enter it. Absence of a receipt does not mean that the supply of goods or services did not take place.

I will agree that the taxman might query it, but provided you can produce some evidence that a transaction took place he will believe you. Graeme can take some photographs, nicely date stamped, over a period of time, showing himself working in the building, some finished vans taken outside, etc etc, to prove that he was conducting business from there. That proves that the transaction was genuine.

All the taxman can query now is the amount. Now if Graeme was claiming his rent was a thousand pounds a day he might have a problem convincing them that he wasn’t fiddling, but in this case the amount he is paying is so reasonable, if not downright cheap, that he won’t feel the need to investigate further.

As one example of something similar was recently when we needed some guttering replaced on our unit. The gentleman insisted on being paid in cash with no receipt, but I failed to see why the fact that he was fiddling his tax meant that I should lose out. So, I can prove:-

1. That the job was actually done because the evidence is still on my building.
2. Who did the work, with some photos of him doing the job with his van in the background to give some nice identification.
3. The amount is more difficult to prove, but what I do is to go to the bank on the same day and draw out the exact amount so that there is a nice paper trail to show that, on the balance of probablilites, my figure is likely to be correct.

No problems.

VAT is a different matter of course, because a tax invoice is a legal requirement for that.

[Peter Dee]

That’s fair enough John but when he is asked why he paid in cash and why he didn’t get receipts, he may find himself in Court for aiding & abetting tax evasion by his landlord (as Peter Shaw outlined).
A one-off job for guttering is a far cry from a regular payment for a major outgoing of the business.

[John Childs]

quote Peter Dee:

That’s fair enough John but when he is asked why he paid in cash and why he didn’t get receipts, he may find himself in Court for aiding & abetting tax evasion by his landlord (as Peter Shaw outlined).

I don’t think so Peter. You cannot force people to give you receipts.

I think that provided Graeme can show evidence that he, personally, has made every effort to comply with the law, and that his paperwork is complete and correct, then he is bombproof.

They might ask the awkward question as to why he didn’t report his suspicions about his landlord to HMRC, but that isn’t compulsory.

[John Childs]

Anyway, HMRC would have to prove aiding and abetting.

By putting the rent in his accounts Graeme will have declared all his dealings to the taxman in a proper fashion. Clear and above board. They cannot then come back later and say that he attempted to hide or disguise his rent transactions as part of a conspiracy with his landlord to defraud HMRC.

On the other hand, if he doesn’t declare his rent payments, then he WOULD be aiding his landlord to evade tax, by helping him to hide the transactions.

I think that there are more dangers in not declaring his rent payments than there are in doing it properly and declaring all his outgoings.

[David McDonald]

Hi

Not over rent but we had a similar problem with lack of receipts from a supplier who wanted to be paid in cash. I actually do think he puts this through his books (could be wrong through). Either way it’s not my concern what he does.

I just get my accounts lady to send him a formal letter every now and then asking him to provide receipts and we keep copies to show we are at least trying to get him to give us the paperwork. My accountants say this is good enough.

Cheers
Macky

[Peter Shaw]

quote :

You cannot force people to give you receipts

I didn’t think that was true, John. I thought it is a legal requirement if requested.

Your other logic is quite sound except for the fact that the taxman makes the rules, as he goes along. Which is why investigations are so troublesome.

In the circumstance being discussed I still think he would be foolish to do cash in hand.

Peter

[John Gregson]

Interesting debate on Receipts.

I was told by an accountant that if amounts are found entered in the books and no receipts kept it is common practice for the accountant to group them all together and put them down as drawings.

[John Childs]

Common practice it might be John, but wrong.

I hate jumped up accountants. Sometimes they forget who pays their bills and are under the impression that they are working for the taxman rather than their clients.

If there is no evidence as to why cash was withdrawn from your bank account then I think they might be justified in putting it down as drawings but, paperwork or not, if you can show convincing evidence as to what any particular payment was for, then they should have no choice but to put it under the appropriate expense heading.

If my accountant did otherwise I would string him up, rape his wife, and barbecue his daughter for my dinner.

Yeah, I know. I’m an old softy for letting him off so lightly. 😀

[John Gregson]

:lol1: great reply – still laughing now as i’m typing.

The accountant that told me this is now my ex accountant :lol1: I think she was just trying to keep me on the straight and narrow as I was a new business and new to accounting.

A reminder to myself – £25 petty cash per month to pay for – eh – the guttering that keeps falling off the building :lol1: