Art for arts sake......

Art for arts sake......

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.... & then phones me to ask if that's ok! Well is it I ask you? He contends that as it's of cows (he manage's dairies) it's for the business & wants to hang it on the wall in his home office. He says is "an investment" (could it be a Rolf Harris I ask myself?) but I say the company would pay tax on any profit and an any case he should keep the company lean. Is this good advice?
Kevin Read

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By AnonymousUser
01st Sep 2006 10:04

If the painting is that good and appropriate to the business could he not have it duplicated onto the firms stationery,etc, and thus it could become a 'proper' business expense - otherwise I agree it seems a bit daft.

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By martinfoley07
31st Aug 2006 14:53

lots of issues, ironically, for....
....such a simple act.

It would be helpful Kevin if you spelt out if the person owns the business (presumably yes, or owner might be unhappy, but I've seen worse - from directors of FTSE 100 companies down, not to mention Lord Chancellors !!).

Whatever, your client is of course being pretty stupid tax-wise by claiming it's an "investment" (and I note your cynicism). If it is bought as an investment, it is not deductible against Corporation Tax - so it is the daftest bit of tax "planning" imaginable - he would have to add it back for tax comp purposes. Effect - absolutely zippo.
Worse, though, when he sells it, if it is in his company, he gets taxed on it, as you say.
If he owned ot personally, he would not get taxed on it unless he flogs it for £11k !! (assuming no other taxable gains in the year).

As an alternative, could he drop the "investment" nonsense, and argue it is an expense of the trade (not a capital item) used in the year of purchase? Hmm, given the cost and fact it is hung in his home that seems more than a little questionable.
If he hung it in an office which WAS his sole businesss place, and it were less valuable, it could run as an argument.

So surely you just have to tell him he gets no tax allowance/relief anyway, and if he insists on putting it through the company he is potentially creating a tax bill when none would otherwise exist.

And that is long before we get to issues of benefits-in-kind, which would create a tax bill from nothing again !!

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By User deleted
01st Sep 2006 10:26

?
How do you hang a picture using a company cheque?

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