I act for a sole director and shareholder who is also the managing director of their own limited company and they are being investigated because the company incurred an admission fee on behalf of the director and the inspector believes it should be included as a BIK without being an allowable expense against their income. For the sake of argument, the admission fee was incurred wholly, exclusively and necessarily for business.
Having told the inspector what my client's duties involve and why I believe the admission fee is an allowable expense, the inspector is now asking for an employment contract or service agreement or similar documentation.
Since they are the only director of the company and it is very small and they do not have a service contract, could somebody let me know how I should respond to this request? Should I be providing anything, and if so what?
I really hope someone can help me with this because it is dragging on!