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Discussion Starter · #1 ·
Hi can I just ask a question about evidence for self-employment...
Does one have to prove one's self-employment income through payment entries into a bank account ie on bank statements ie during the April - April tax year? What if you were paid cash and did not necessarily put all your income into the bank but spent it on other business expenses. Your income would not then be reflected in the bank statement. According to Appendix FM must the bank statements entries point to an amount of £18,600 or is the accountants audit of income and expenses and submitted HMRC tax return enough to prove this?

Would really appreciate some clarification on this if possible. Thank you.
 

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If you haven't paid yourself a salary,it is my understanding that as a sole trader, they look for all taxed income and whatever the balance is following expenses counts as your income. They do want to see proof of that income, so if you received cash but didn't claim it properly and pay tax on it, it will not count.
Obviously self employment as a category entails more paperwork and proof, but that's the simplest answer I could find about just your question.
Hope that sort of helps. We also filed under category F and it's really challenging.

Edited to add: This also falls under the accounts, audited or unaudited as you'd likely have written what you spent somewhere.
 

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Discussion Starter · #3 ·
Hi thanks for your reply. No all income has been faithfully declared to HMRC and tax will be paid on it. What I mean is if you added all the cash entries paid into the bank account it would be less than what has been declared to HMRC because some was spent before it was put in the bank. So do the home office need both sources of proof or is just the HMRC declaration enough. For example someone could pretend to have earned more income and pay extra tax just to help them meet the Home Office financial requirement. However they couldn't do that if they needed to back up the figure with bank statement entries which corresponded to the amount declared to HMRC.
 
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