Not All Bagels are Created to Destroy the World
What do you get if you mix revenue authority tax inspections with science fiction? Probably not what you’d expect if Everything Everywhere All At Once is anything to go by. Surely one of the best films of 2022 and an outstanding reason for the Elman Wall Tax Team to visit the cinema.
Jamie Lee Curtis brilliantly plays a demonic tax inspector (seriously….no jokes!) to Michelle Yeoh’s immigrant laundromat owner, worn down by life. Throw in interplanetary travel, a racoon and a few sex-toys and what you have is quite possibly something you’ve never seen before.
And when it comes to tax, it’s refreshing to note the film is not all make-believe. Indeed, there are a few factually correct points for everyone to keep in mind:
- Hobby or Trade – not all profit is taxable, but not all losses can generate tax relief. It’s important to know where a hobby ends and a trade starts. Hint: unless you’re running a Karaoke bar, a karaoke machine is probably not a trading expense and so can’t be deducted from your tax return.
- Multiple trades – especially with Making Tax Digital beginning to loom on the horizon carrying on more than one trade, being aligned to each other or totally separate (or even on a different planet) can have consequences. Therefore, if you do run both a laundrette and party business, make sure to know which business bought the party hats and which business had the washing machine repair cost;
- Allowable deductions – almost always the biggest question in tax. What can be deducted – is a karaoke machine allowable expenditure for a laundry business? The test is whether cost is ‘wholly and exclusively’ for the purposes of the trade, but lines can be as blurred as verse-jumping in the multiverse. So, if you can explain that the only purpose for buying the raccoon was to help the chef in your restaurant’s kitchen, there should be no reason why the cost can’t be allowed.
In the end, you may not always come across a tax inspector as human as Deirdre Beaubeirdre, but then again not all bagels are created to destroy the world.
If you do two things over the next few months – see this film and get your 2022 tax return done!
Don’t forget that you can always reach the Elman Wall Tax Team by telephone at 020 7600 5667 or by email at TaxTeam@elmanwall.co.uk.