Client has a shop in a City which was in a different Tier to where he lives.
Over the last few weeks, he has been staying at a B&B close by the cafe so he doesnt have to travel from one Tier to another (he lives in a very high Tier area) - although he has been staying every night (so I would think it prudent to disallow those nights he hasn't been working) can this be allowed for Corporation Tax purposes?
Another question is, as we are about to go into another lockdown, he will be able to still trade (as a takeaway and not eat in) and so given that we are supposed to restrict travelling (he's about 90 mins away) can he claim for this period too? Obviously he can't work from home.
Many thanks
Replies (19)
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Allowable for CT.
Taxable as BIK for client (or payroll if he is being reimbursed).
That is, unless there are some Covid specific rules on this.
Why does he live 90 minutes away from his business?!
Given special circumstances, I would consider claim and add a note to corporation tax computation. No P11d, Notes states circumstances and no P11d
BUT better that employee pays and claims as expenditure allowance on his tax return. Claim then much more visible.
Would need to increase salary
Claim against CT and BIK is more tax and NI than if paid self out of dividends
He's got his own house, I take it ?
I'd allow that. These are exceptional times. I don't see that there's a benefit.
Agree, not a benefit
More of a state driven punishment
Full cost, ignore non working days
He is paying to comply
When he was commuting, how did he do so?
If he drove, for example, is his conduct reasonable (L know - not a taxes Acts test)?
Who contracts with the B&B?
I'm doubtful that:
-If the company contracts that it won't be a BIK
-If the director contracts that any reimbursement or settling of debt shouldn't go through the payroll.
BTW you seem to have two clients. The client who has the shop (the café?) appears to be a company judging by your reference to CT, but ltd companies don't need to stay in B&Bs, so you must also have a second client that is a human being. I'm not just being pedantic, your lack of perspicacity has led you to asking the wrong question, it is not a question of is CT relief but will the director/employee be taxed on remuneration or a bik.
People reaching conclusions without knowing the facts. As per.
Is this shop/café a permanent workplace?
To be fair, HMRC's view is that accommodation near a permanent workplace is taxable.
But that was an opinion offered before Covid came along and what's reasonable changes.
Fair enough. But Parliament changes the law. Lions, Dragons and even an Aweb of Pauls don't.
Fair enough. But Parliament changes the law. Lions, Dragons and even an Aweb of Pauls don't.
Nor HMRC.
These are different times. I can't remember the Government telling folk not to move about more than they need to so the least I expect is a tax break
You recognise that in "normal circumstances" the tax rules give taxable BIK on the director. You think there should be a tax break specific to the new circumstances - presumably you mean that the BIK should be removed. You recognise that the power to do that lies, not with you, not with HMRC, but with Parliament. Parliament hasn't acted (yet) to provide that tax break.
You could write to your MP. Start a petition. Whatever.
Instead you start your personal mutiny on the Aweb by encouraging the OP to break the law and self assess a "tax break", without telling them that's what they'd be doing? Of course, you're right behind them. About 20 or 30 miles behind them (to borrow a line from Blackadder). And bravely staying on the right side of the law, personally.
Have I understood correctly?
Take a tip from HMRC and deduce the intension of Parliament.
Which means ignoring the letters of the laws as drafted
Another General Melchett. The law is what it is and it won't be your [***] it comes back to bite if you misread parliament's alleged intention and "reinterpret" the law accordingly.
Obviously, if Parliament really has the intention you suggest, it has the power to change the (letters of) the law.
Agreed. But are you saying the law has an inbuilt 'special occasions' exemption into which lockdown fits, or are you saying that it would not be a BIK in normal times? Or is there a third alternative that I'm missing?
In either (/any) case, you need to leave aside your emotion and argue from the law. Lay out a sensible argument and I'll support you. At the moment, you are giving me sawdust to plait. Oh, the irony.
FWIW, the place I would expect to see the exemption - or at least a hook from which to begin to hang an 'intention' argument - is s99(3)(c). Sadly, it is silent on the issue.
I'm making an assumption that s99(3)(a) doesn't apply.
It's an expense wholly, exclusively and necessarily incurred. Necessarily because now the Government say you have to do it.
By the same logic, [any cost of] commuting to work is [incurred] wholly, exclusively and necessarily. Necessarily, because your employer says you have to do it.
https://www.accountingweb.co.uk/any-answers/working-from-home-allowance-0
Let's ask one of the Lewis people?