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Goods for own use-Cost or Market Value?

I have a client who owns a licensed restaurant and was wishing to clarify whether drink and food taken for own use should be disallowed at cost or market value. Therefore affects the VAT element disallowed too.

Thanks for any help given

david

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By Exector
30th Jun 2008 15:23

Cost in your quoted situation
Non VAT HMRC commentary here:

http://www.hmrc.gov.uk/manuals/bimmanual/BIM33630.htm

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By Anonymous
25th Jun 2008 08:57

Market value of what ?
Two extremes of market value determined by manner of consuming business stock personally :-

If the proprietors employ staff and have a meal in the restaurant prepared by staff then market value = sale price of the meal provided.

If the proprietors simply take stock from the restaurant food stoarge area and cook it themselves at their own expense and eat it in their own living area then market value = just the food itself = the price they might otherwise pay at Lidl, Aldi, Netto etc.

And there's an even lower value that could apply : the market value of "left-overs" (part-used opened boxes/tins taken home) and short-dated or beyond "best before" date stock. The market value of such commodities might be negligible.

Regardless of the manner of stock appropriation to the proprietor I advocate recording it for future reference - not just what is taken, but the nature of what is taken (ie. meal in restaurant, goods in date, goods out of date, part-used open packaged products).

By comparison,
if the business were a Ltd Co then the BIK of the meal provided to directors in the restaurant would be marginal cost to the employer (Ltd Co) - not the full selling price of the meal : the resulting figure could be slightly more than bare cost of the food.

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By kevin9
24th Jun 2008 14:22

Yes but
The previous posters comment only applies to Vat. Budget notice 19 sets out the Revenue's predilection to rely on their interpretation of the old Sharkey vs Werner case. This means that for direct tax purposes the appropriation of stock for own use should be at market value. I think it is unfortunate that this is now being put on a statutory footing because it conflicts with GAAP and also the principle that you cannot make a profit out of yourself. I also fail to understand the need for this to be enshrined in statute. Hey ho.

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24th Jun 2008 10:48

Goods for own use
Here is link for goods persnal use with the example from HMRC website
http://www.hmrc.gov.uk/manuals/bimmanual/BIM31560.htm

Regards

Nilesh Mandvia

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