All about apportionment. By Nichola Ross Martin

Posted by AccountingWEB PM | on Mon, 17/11/2008 - 09:38 5438 2 comments

Nichola Ross Martin, of the Practical Law Company considers when traders can claim a part or proportion of an expense.

In business you tend to incur costs for one reason – for the purpose of the business. Some expenses are incurred for more than one reason, and if you can identify part or a portion of them which relates wholly and exclusively to your business you can claim part of the expenses for tax purposes.

Continued...

Apportionment

ianmckechnie | Wed, 19/11/2008 - 19:16 | Permalink

I missed the cat discussion and the wonderful puns the first time round (unfortunately).

However, I don't agree that cats are never allowable : farm cats are clearly pest control and their costs should be claimable.

The position is definitely different for guard dogs - I did have the discussion some years ago with a tax Inspector - the deciding argument was "If you think it's a pet, you can pat it on the head - and I'll tell them at the inquest what happened".

PS - Useful article, thanks.

telephone expenses

jbrameld | Wed, 19/11/2008 - 18:37 | Permalink

I was very interested to read about apportionment, particularly regarding telephones and internet. Thatnks for an interesting article.

I believe it is true that an employer can provide a fully expensed mobile telphone for an employee for no BIK, however my accountant tells me that the contract must be in the employers name. Furthermore he tells me that my claiming the costs of my mobile phone bills is a taxable benefit, despite the fact that recent analysis of itemised call lists show that 96% of the time used in the minutes bundle is on business calls. I frequently (2-4 days per week) work out of the normal office on several project sites and communication is important. He advises that claims can only be made for separately identifiable business calls which means that any calls in the minutes bundle are not allowable on a pro-rata basis. The only way round this is to have a very low inclusive minutes tariff, with itemised billing and provide an analysis every month. Is this correct? This would mean a more expensive option all round is required just to get round the silly tax laws, or is it reasonable to claim 96% of the bill? I thought HMRC abolished the BIK and requirement for bill analysis as the burden was too great.

I have a similar situation with home telephone and internet as I frequently work from home, sometimes at odd hours as project requirements dictate.

Does anyone have experience of apportioned claims of minutes within a bundle being allowed for an employee? Is it different for a director?

Thanks for an interesting article - all opinions gratefully received.

Jason