I have been invited to an awards ceremony by my customer - so I can do some networking, she has sat me next to one of her suppliers - and feels if I make a good impression I will gain an important new client.
I wanted to simply wear my blue pin stripe suit, but she has told me I must wear black tie dress, so I have had to go out and buy a new black suit shirt and bow tie just for this event - it was cheaper to buy than hire.
I run a Limited co., so have paid for the suit using my co. debit card - can I claim some or all of this cost - referring to HMRC docs I cannot see where I can claim, but reading this article, maybe it is claimable:
http://www.dailymail.co.uk/news/article-2328453/Taxpayer-billed-thousand...
Thanks
Related resources
Replies (13)
Please login or register to join the discussion.
Look at
Mallalieu v Drummond HL 1983 57 TC 330. You will find the definitive answer is a big fat NO.
Was it a company debit card?
If the company bought the suit, and only makes it available for this single occasion, and then donates it to charity, I think it would be allowable expenditure, and the benefit in kind can be minimised.
Please disregard the authenticity or validity of anything you read in the Daily Mail.
@Steve
but how do you get round the duality of purpose issue which was the point that was the cause of Anne Mallaiieu's case being rejected. After all the op will have to wear clothes to this function.
But Lady Mallalieu...
... was self-employed.
If the purpose of the suit is to remunerate an employee it is wholly and exclusively for the purposes of the company's business. There is a benefit in kind for the period for which the suit is available (unless the ITEPA 2003, s 316 exemption can be claimed), hence the suggestion that it be donated to charity when finished with.
Obviously for a self-employed person you can also dodge the Mallalieu issue by claiming that the suit has an expected life in excess of two years, and so is capital expenditure, eligible for AIA.
There is no wholly and exclusively test for capital allowances purposes and allowances are only restricted to the extent that there is use otherwise than for the qualifying activity in the period. This would be use for the qualifying activity.
Should have
read the op more carefully - overlooked the fact that they are operating via a Limited Co.
Interesting stuff, reading the above it appears the suit can be claimed for in full, as long as it given away after use, I assume some sort of receipt from the receiver would be required.
The awards ceremony is an annual event - if I keep the suit for the following years opportunity to network - would it not be to the businesses benefit to retain the suit, and keep it in storage for the exclusive purpose for which it was bought
I must ask Steve
Genius as always, Steve, but I must ask have you ever had your assertion re clothing being a capital asset tested? I need a new wardrobe.
Hi cparker87
Ms Mallalieu's wigs and gowns were capital assets and qualified as plant on which, therefore, capital allowances (AiA these days) could be claimed.
The cleaning and repair of the wigs and gowns are revenue expenditure and a direct deduction given for them.
It was her clothing worn underneath the gowns that was at issue.
Thanks
Hi cparker87
Ms Mallalieu's wigs and gowns were capital assets and qualified as plant on which, therefore, capital allowances (AiA these days) could be claimed.
The cleaning and repair of the wigs and gowns are revenue expenditure and a direct deduction given for them.
It was her clothing worn underneath the gowns that was at issue.
Thanks for clarifying :)
Sorry I don't understand why someone would give away something to get a 20% tax deduction. It has still cost the company the net amount. Sell it on ebay for more.
OK - can I clarify, as the purchase is through a Ltd Co. it is treated differently than if being Self Employed, so the Mallalieu v Drummond HL 1983 57 TC 330 case does not apply, I want to check - in case the HMRC decide it has incidental personal benefits.
If the suit is kept for the following years networking event, rather than selling it on - would it draw any question marks over its 'wholly & exclusive' purpose. I don't wear black suits (unless its a requirement - as at this ceremony), and in fact have a blue pinstripe in the wardrobe I use normally.
@ Chris
I've never tried the argument, because I've never seen a situation where it would be worth arguing.
I disagree with Triggle's analysis of Mallalieu though. Lady Mallalieu's claim did not include any wigs and gowns. It included £7 for a replacement collar that it was agreed was (like her wig and gown) part of her barrister's costume, and allowable as revenue expenditure.
Lady Mallalieu did not attempt a capital allowances claim. That would probably have only given her a 15% annual writing down allowance at the time.
The capital allowances approach was something that I saw suggested by Keith Gordon a while back.
It should also be remembered that Mallalieu is considered wrongly decided by many (including me and Mike Truman, the former editor of Taxation). She had succeeded in both the High Court and the Court of Appeal, and the House of Lords "clever" approach was probably constructed simply to avoid opening the floodgates.
@ le-rank
If you have a black suit at your disposal there is arguably a benefit in kind, whether or not you in fact use it. See the diamond necklaces in the(everybody must read) Rockall case.
If there is a benefit, then you will be charged to tax on 20% on the cost of the suit every year, while it is available. Hence my suggestion for its disposal.
And I had suggested giving it to charity on the basis that it won't have been that expensive if it was cheaper to purchase than to hire.
However, it may be possible to argue that any benefit is exempt under ITEPA 2003, s 316 (see EIM21611).
The s 316 exemption wasn't considered in Rockall, for the reason that a lot of things are not considered by tribunals; the point was simply never argued.