Director of a UK company is emigrating back to his native America. His UK company [sole director/sole shareholder] is ceasing trade. He seems adamant his relocation expenses are CT deductible. I have shown him the link to HMRC Gov.uk website and also EIM03108 and said they wont be deductible, even if the company was not ceasing.
He still is adamant they are.
Has anyone got any other links to definite answers showing if the costs are deductible or not in the cessation accounts. [and if they would be if the company was not going to cease trade]
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Presumably he can have a deduction for CT purposes on the basis that it's remuneration. Maybe that's what he means - or maybe not.
Even if they were treated as remuneration I'm not certain that, strictly, they'd be allowable - relocation costs W&E incurred for the purpose of a trade that is ceasing?
There's an income tax relief for relocation expenses but it seems unlikely to apply in these circumstances.
Good luck.
Indeed. I just tagged onto the post made by Lion.
Though I don't think the OP has helped matters by referring to an employment income manual.
No, he didn't.
If he's not careful, he'll get saddled with a company expense that's not allowable and a taxable benefit on the employee/director.
To the OP - why would you think that EIM03108 is relevant to a question about CT deductibility?
I just love the way we all look for legislation.
Relocation back home of the individual is not wholly and exclusively for the purpose of the business.
In fact it is not for the business at all.
I'm not sure what point you're trying to make - tax legislation underpins all tax advice. If you don't know, or look for, the relevant legislation you're in danger of giving the wrong advice.
There are lots of things that directors buy that has [***] all to do with the company.
It doesn't prevent it being taxable on the individual and deductible for the company - just not in this case, it would seem.
There is a good chance that the cost can be claimed as a deduction for CT purposes as remuneration for the director's past services. He worked so hard that the company have agreed to pay his relocation expenses as a reward. The director will then be liable to income tax on the same amount as either salary or benefit in respect of an employment carried out in the UK. From the information provided, he will not qualify for the relief for relocation of an employee. If that is what he wants...
Just to add that if the Co Director is paid these funds when he is no longer living in this country and they are asessed under income tax he may be exempt from uk income tax in the uk. The cost (if salary like) would be a CT deduction.
Just to add that if the Co Director is paid these funds when he is no longer living in this country and they are asessed under income tax he may be exempt from uk income tax in the uk. The cost (if salary like) would be a CT deduction.
I'm not really sure what that means, but ITEPA s27 may be in point.