We are pitching for new business relating to a premium watch maker and would like to purchase a watch to help us with our research.
How would we account for this? Is it possible to reclaim VAT on this? What would the expense be classified as?
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Researching what?
You are going to have to give a lot more detail to get a sensible answer.
What research cannot be done without the watch purchase? What business are you in? Is there definitely work available with the premium watch maker? If so, are they even aware of you at present, or is this entirely speculative?
Depending on your answers to those questions there may be others, so more detail is better. Alternatively seeing an accountant face-to-face might be a better option.
We are an advertising and marketing business. We have been requested to pitch for some work and feel that having one of their watches will aid our ability to put together a thorough campaign. Unfortunately they are not loaning out goods for the pitch.
Likely nothing
You could pitch without the watch. In fact just having a "feel" that the watch will aid you in putting together a campaign shows how vague a justification this is. Presumably they make more than one watch, so how is one watch going to give you the knowledge to market their whole range anyway? The business also has no use for the watch itself, so it seems to me one of the business owners is going to end up with it on their wrist.
If you try to claim for it, you are going to have trouble countering HMRC making an assertion that whoever ends up with it was just trying to get business tax relief for an entirely private purchase.
When you pitch for other work...
...do you feel the need to buy the product? Or is it only premium watches that bring on the feeling?
Also, once the pitch is over, will you be selling the watch (at market value) as surplus to requirements?
If won, we would likely gift the watch to the account director if the campaign proves successful which raises the issue of tax on the gift. Can we raise a PSA to avoid the employee being taxed on this? If not won, we may use it as a prize at a staff party - leading to yet more tax issues!
Public Service Announcement?
If won, we would likely gift the watch to the account director if the campaign proves successful which raises the issue of tax on the gift. Can we raise a PSA to avoid the employee being taxed on this? If not won, we may use it as a prize at a staff party - leading to yet more tax issues!I assume you mean Purchase and Sale Agreement. Is the account manager going to pay full value for the watch? That's the only way they are not going to get taxed on it.
If you pass it on to an employee, and full tax and NIC are paid as a benefit in kind, then a deduction is likely to be fine. Otherwise no dice, for reasons already given.
@stepurhan
PSA = PAYE settlement agreement https://www.gov.uk/paye-settlement-agreements/overview
very useful if the employer wants to pay tax on biks rather than pass on to employees
That is useful
PSA = PAYE settlement agreement https://www.gov.uk/paye-settlement-agreements/overviewI can't help thinking a high value watch is not going to fit the criteria though. Probably not a minor item, and the irregular heading seems to cover one-off events, not just that you don't hand out watches on a regular basis.very useful if the employer wants to pay tax on biks rather than pass on to employees
Why not...
Why not just pretend that your existing cheap watch has lots of fancy features (that I'm sure you can find details of in an advert) and go from there?!
I think I might try sending a few speculative letters to bookshops - that way I can justify putting my ever-increasing collection of books through the business :)
PSA...
... Definitely includes 'one off gifts which are not minor'
http://www.hmrc.gov.uk/manuals/psamanualnew/PSA1070.htm
It just makes it more expensive for the employer... (though allowable)