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Client wants to claim all his foreign travel

I have a client in the film industry. He thinks he should be able to claim every single bit of his foreign travel on the grounds that he needs to know what these places look like.  He says if a director tells his he wants, for example, a New York upper east side background, he has to know what that looks like. I have told him that, ultimately, he would have to be able to convince a court that he would not have gone on the trip if it were not needed for his work. Obviously everybody he knows in his profession claims 100% of their foreign travel in calculating taxable profits!

However, when a client goes on at you about a thing like this, you start to doubt yourself. Can someone give me a second opinion please.

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23rd Mar 2012 09:21

What is his actual trade or profession?

I would say he has to prove the trips are business and not just a 'jolly abroad' and if he cannot do that with you then he is hardly likely to succeed with HMRC.

Does he have anything in writing from the Director to prove this is part of his engagement?

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23rd Mar 2012 09:41

On his head be it

I used to help deal with a major recording guitarist and singer/songwriter who wanted to claim for all his expenditure on of all things, his paper bill.  He said he only bought papers so that the newspaper headlines would give him ideas for songs.  In a meeting with the tax partner of my then employers he put this point and the tax partner said "you have to understand, life is not tax-deductible".

I'd simply set down for him the risks, the likely costs of investigation, the opening up of previous years in which similar claims would be presumed.  If he's prepared to sign up for that and the consequent costs and still make the claim, then go right ahead mate.

I presume by the way that he is a location scout of sorts.  If he's a cameraman or a sound guy, laugh hysterically at him.

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23rd Mar 2012 10:14

Alarm bells.  If reason is

Alarm bells.  If reason is not seen do you really need this kind of client?  You will get short term fee income and long term headaches which may actually hinder your growth. 

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23rd Mar 2012 11:18

Its a matter of wholly and exclusively

These cases all depend on their facts and right now we are seeing HMRC even arguing contrary to their manuals.

So, if you are travelling on business because that is your job, you should not usually have a problem. If you are travelling for pleasure and it happens to also be useful for work too, then alarm bells start sounding.

Happy to do a peer review on the case and evidence - just done a hearing on this subject for a firm and so I can direct you on HMRC's likely approach

Virtual Tax Support for accountants: www.rossmartin.co.uk

 

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By chatman
31st May 2012 10:19

Thanks for responses on travel

Only just seen your responses (AWeb assumes by default that you are not interested in answers to your questions).

Thanks for your answers. Is there not a MLR issue with simply making him aware of the risks and not reporting him to SOCA? One for David Winch I suppose.

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