The clients use their home extensivelly for business for marketing purposes. The dining room is used as the main workroom in which they sort out clients advertising needs for about 9 hours per day and agreement has been reached with HMRC as to the allowable costs.
The lounge adjoining the dining room is opened up as a reception room for clients waiting to be seen from 8.30am to 6pm for 5 days per week. Theer are probably about 5 clients per day visiting. My argument is that the lounge is held out as business premises during this time and the associated apportioned costs must be allowable, no matter how many clients visit.
HMRC says that the lounge remains private when there are no clients are in situ.
Ancillary to this is my argument that the lounge furnishings (mainly 3 piece suite, carpet, fire and TV - which is on New 24 for clients all day) should also qualify for capital allowances, suitably apportioned.
HMRC says these are private and will not entertain a claim.
When does business use begin and end?
John Mason
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Replies (7)
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Andy....
There was a ridiculous thread some months back. I am sure there must have been a technical tax issue involved somewhere. Anyway, for some reason that thread developed along the lines of seventies iconic music heros. Bowie featured, as did other seventies artists.
Aweb posters started recreating names for themselves or something similar (goodness, it must have been a Friday afternoon!!). As a form of contribution I renamed Clive. I called him Blob instead. Only on Aweb am I battling with my alter ego. Not as successfully as Bowie did with Ziggy of course.
Blob probably belongs more to punk 80s in fact. I will change it back soon, but it's nice to have a selection of names, especially if you can choose them yourself, rather than inherit them from parents! I'll "Deblob" Blob next week. Remind me.
Use of home
Thanks Bob,
Clients have the franchise for a small free newspaper whereby they sell the advertising space on a commission basis and prepare the adverts and then edit the whole paper for publication before it is sent to "head office".
This is all done from home.
Clients visit both by appointment and ad hoc to go through advertising requirements and to view and agree proofs, which is why the lounge is opened as a reception area during the day. There is no other use during the day other than availability for clients when they call. There are other business related callers such as deliveries of flyers for insertion in the papers, people making payment etc.
It is kitted out as a normal lounge but with double glass doors leading into the dining room, which is the only access route to it.
My argument is that it is held out as business premises during the day and costs should be allowed on this basis as should a claim to capital allowances on the fixtures and fittings used by clients on the basis that an office does not become private beacuse no-one is actually in it and so the same with a reception room for the period it is held out to be so.
Regards,
John Mason
..extensively for marketing purposes.
What is the exact nature of the client's business? Also what exactly is "sorting out clients' needs"? What is in the reception room? Only five clients (approx) a day visiting. So why are there clients waiting to be seen if only approx five clients a day visit? Are there not agreed times and dates for appointments?
What does the business stationery show? I assume it contains the house address and the house telephone number? Is an e mail address pointed to the house as well? HMRC probably have a point here. Is there a brochure/leaflet making reference to the house address?
If only five clients a day have appointments (approx!), then I would expect that where no appointments are being fulfilled, the space is to all intents and purposes private space. Duality of useage, but HMRC have always historically taken a dim view of taxpayers extensively squeezing tax relief out of home space and costs.
I suspect that whether News 24 or Tellytubbies is on the TV, the outcome may be the same. Fight it, but with powerful facts and principles. Sometimes it's not worth the hassle. Your business stationery and advertising is an important factor in this case. I assume that this is an ongoing enquiry case. Call if you need help
Use of Home
Thanks Taxation Pete. I have been down that route and am at loggerheads with HMRC on it.
It is an ongoing enquiry case and HMRC seems blinkered. I have threatened the Special commissioners and this may be the route I have to take.
I thought we were on self-assessment
what's all this about? HMRC agreed this and didn't like that.
surely you don't get HMRC agreement for every little detail such as this?
Clearly the lounge is being used for business purposes as there are clients using it as a waiting room.
In this case some of the costs are perfectly allowable.