Travel is part allowable if combined with personal holiday

Travel is part allowable if combined with...

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Limited company situation.

My client splits his time between the UK and south of France. He is in the entertainment industry and when in France he has meetings with and entertains customers and other business contacts.

He generally drives down to his place in France. Could any part of this drive be reasonably treated as business or does it simply fail on the wholly exclusively and necessarily test?

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By Matrix
01st Aug 2015 18:59

For a Ltd company the test is wholly and exclusively.

If he is making the trip anyway for personal purposes then I would not claim anything of the journey down. However if he incurs additional mileage and expenses for the business element (so, travelling to a restaurant and entertaining clients) then put them through the business in the usual way.

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By thehaggis
01st Aug 2015 20:36

Not Quite

For the company, any payment given to the employee is taxable on the employee/office holder and is therefore paid by the company wholly and exclusively for the purpose of giving a taxable emolument to the employee.  The company gets the deduction.  The question is whether the employee can also get a deduction for the costs incurred.

For an employee or office holder there is no wholly or exclusively test.

s337 provides for costs necessarily incurred on travelling in the performance of the duties of the employment

338 provides for the cost of necessary attendance at any place in the performance of the duties of the employment (except that ordinary commuting and private travel are disallowed).

The substantial purpose of the travel to France is for a holiday, which is a private purpose. None of it can be allowed,

Travel from his holiday home to see a client would be allowed.

 

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By anneaccountant
03rd Aug 2015 00:03

So we are saying if the cost is put through the company it is allowable in the company accounts but the Director will be assessed for tax on his personal tax return.

In this case then would it be just as easy to charge it to Directors Loan Account rather than motor expenses? Or is as broad as its long?

Many thanks

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By Matrix
03rd Aug 2015 06:28

If it is not a reimbursed expense then there would be Class 1A so the expense route would be more inefficient.

Personal expenses should not be charged to the limited company, if they are then they should be put through the DLA otherwise they will be treated as earnings.

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