Self-employed: claiming expenses initially paid by somebody else

Self-employed: claiming expenses initially paid...

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I just started a small trading business, importing goods from Asia and selling them in the UK. I'm self-employed at the moment, though my boyfriend is helping me and we'll look to incorporate when the business concept is proven to work. 

I pay for most expenses with a separate bank card to keep it simple.

We need to fly to Asia to visit our suppliers and my boyfriend paid for the flights and hotels using his card.

Is it possible for him to claim that back as a business expense? Should I pay him back using the "company card" and then claim it back as a business expense?

Many thanks. 

Replies (16)

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By johngroganjga
13th Oct 2015 09:33

Are the payments made by your boyfriend loans to you, or gifts?

If they are loans to.you then the expenses are yours. If they are gifts they are his expenses but he can't claim any relief for them as business expenses as he has no business - only you have.

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By tusio
13th Oct 2015 09:41

They could be considered loans
Thanks for your reply. They could be considered loans. Do I need to pay him from the designated "company account"? Do I need to do it straight away, within the tax year, or just keep track of them and pay at some point? Does he need to charge me interest?

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Replying to Calculatorboy:
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By User deleted
13th Oct 2015 09:47

On that basis
On the basis of your questions, I would strongly advise you appoint an accountant. These are very basic questions and I suspect your import business is, or will become, quite complex

tusio wrote:
Thanks for your reply. They could be considered loans. Do I need to pay him from the designated "company account"? Do I need to do it straight away, within the tax year, or just keep track of them and pay at some point? Does he need to charge me interest?
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Replying to Calculatorboy:
By johngroganjga
13th Oct 2015 09:58

Loans

tusio wrote:
Thanks for your reply. They could be considered loans. Do I need to pay him from the designated "company account"? Do I need to do it straight away, within the tax year, or just keep track of them and pay at some point? Does he need to charge me interest?

Not sure what you mean by "could be considered loans".  Either they are loans or they are not. The first thing you need to do is decide whether you are going to pay him back or not. No-one else can help you with that. When you have decided you can move on.

If it is a loan you can pay him back whenever you and he agree. Whether he is going to charge you interest is for you and him to agree. He is perfectly at liberty to make the loan interest free if he wants. You can pay him back out of whichever account is most convenient for you at the time.  

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By User deleted
13th Oct 2015 09:43

Have you got an accountant/tax adviser? With your business being cross border, I'd certainly get one (preferably with relevant experience).

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By tusio
13th Oct 2015 10:19

Loans

Thanks John, that's most helpful.

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By Tim Vane
13th Oct 2015 10:22

Be careful about claiming the cost of his ticket as a business expense of your sole trade. You really should get professional advice.

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Replying to Elgin:
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By Jackie0802
13th Oct 2015 10:46

Exactly

Tim Vane wrote:

Be careful about claiming the cost of his ticket as a business expense of your sole trade. You really should get professional advice.

 

Was thinking the same thing

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Replying to Elgin:
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By User deleted
13th Oct 2015 16:15

Agree

Tim Vane wrote:

Be careful about claiming the cost of his ticket as a business expense of your sole trade. You really should get professional advice.

 

Nail on head!

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By User deleted
13th Oct 2015 16:39

Is there also the possibility that HMRC would seek to disallow the girlfriends ticket, or at least a proportion of it?

Due to the fact that the boyfriends trip was clearly not a business trip - he is not in business, as mentioned above - and therefore, as he went along, an element of the girlfriends trip must also have been to 'holiday' with the boyfriend?

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By tusio
13th Oct 2015 16:48

Boyfriend works in business

It's an interesting question, but in this particular case both the boyfriend and the girlfriend are going on a business trip together. Boyfriend works on the business in his spare time and this trip is specifically to meet the suppliers.

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By User deleted
14th Oct 2015 09:37

So does he have an employment contract?

Or is he an 'ad-hoc consultant' that is not employed?

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By tusio
14th Oct 2015 09:49

Director

Once we incorporate, he will also be a shareholder/director.

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By JCresswellTax
14th Oct 2015 09:53

You can't be

A Director of a sole trade business.

I would suggest disallowing the cost of the boyfriends ticket.

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By tusio
14th Oct 2015 09:58

Ltd

Apologies for not being specific. Once we are happy that the concept works, we will incorporate as a limited business and he will also be a shareholder and director.

 

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By johngroganjga
14th Oct 2015 10:34

I disagree with the above. To the extent that your boyfriend attends and participates in business meetings and other business activities with you on your trip to visit overseas suppliers, the cost of his travel is just as much a business expense as yours is.

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