Co minding expenses

Quick question to keep me legal!

I co-mind and live with another childminder. We work well together and each have strengths and weaknesses. She hates paperwork/nitty gritty of the job. I therefore sort out all the bits we need - buying contracts/replacement equipment/ink/paper/toys/scrapbooks etc even down to food. I get it ordered and pay for it. She pays me an amount per month - what I ask her for to help me pay bills and all the above. It's not a calculated figure - just roughly worked out so we both have enough to live on. It works for us but is this legal? Would it be accepted by HMRC in the event of an audit? If not how should we be doing it? Any advice welcome!

Why not register as a partnership with HMRC and co minders with Ofsted. You will need to fill an application form in with HMRC, do one set of accounts and then enter a tax return showing who has what percentages of the profit. You then do your own individual returns with the figures from this. Ofsted dont need any other paperwork, just notification

Sorry for lengthy delay in responding. Wasn't sure where to go with your response chatterbox as I really don't understand!! Having read a few c/m queries recently i need to get more info I guess. How would registering as a partnership be better?
At the moment we each have our own accounts. We keep our income relatively low (we don't take on too much work) so that after the personal allowance we pay little if any tax. It may sound lazy but I don't see the point in taking on millions of kids, amassing loads of money just to give it to the tax man (and receive less working tax credit!!).

Is there a different allowance for partnerships? If not our combined profit would amount to double and we'd have to pay loads of tax surely?

But are we going about this illegally? Please don't tell me to ring HMRC. I find them as lucid as ofsted when it comes to answering a simple question.

Incidentally we have informed ofsted. Our last inspection was a joint inspection but we got individual reports.

Thanks for any feedback

If you don't intend to make money just carry on the way you are.

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Originally Posted by Fitrix

Sorry for lengthy delay in responding. Wasn't sure where to go with your response chatterbox as I really don't understand!! Having read a few c/m queries recently i need to get more info I guess. How would registering as a partnership be better?
At the moment we each have our own accounts. We keep our income relatively low (we don't take on too much work) so that after the personal allowance we pay little if any tax. It may sound lazy but I don't see the point in taking on millions of kids, amassing loads of money just to give it to the tax man (and receive less working tax credit!!).

Is there a different allowance for partnerships? If not our combined profit would amount to double and we'd have to pay loads of tax surely?

But are we going about this illegally? Please don't tell me to ring HMRC. I find them as lucid as ofsted when it comes to answering a simple question.

Incidentally we have informed ofsted. Our last inspection was a joint inspection but we got individual reports.

Thanks for any feedback

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If you have your own separate accounts you cannot combine your profits...you are 2 separate businesses...perfectly legal.
If you work together with another CMs then you will both be inspected by Ofsted separately....Ofsted have no interest in your financial arrangements just for the combined care you offer.

For allowances and benefits you need to go by whose setting you are operating from and allocate expenses to each
business.
A partnership in business is different.