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Internet broadband - business/personal - BIK??

Can we claim BIK triviality?

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Hi all,

Just a quick one - the company I manage has a broadband service costing around £50 per month.  The service is cancellable month-to-month; the company is not tied in for a year, or some other contractual period.

It is fitted at one of the director's (50% owner) home, as he works from home.  There is a small personal use element.  By month the BIK, if it can be considered as such, would of course be well under the £50 triviality level, and annually under £300.

Can we, given that the service is cancellable month to month, claim each month's benefit as trivial in its own right and therefore dismiss it all as non-taxable?  I have come across the term "legitimate expectation" - not entirely clear on how this applies here but there is no contractual obligation on the part of the company to allow the director a small element of personal use.

I know HMRC may see my suggested approach as an unacceptable workaround, but I don't see this situation in principle as any different to an employer providing an employee with a laptop, and Internet access at work; private use is small (casual Internet surfing at work, using the laptop a bit at home) and the facilities provided are essential to the job (in our case, we're a tech startup).

Would be interested to know your thoughts.

Cheers.

Replies (12)

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By Tax Dragon
17th Feb 2020 15:35

hoxtondave wrote:

It is fitted at one of the director's (50% owner) home, as he works from home.

Does he by any chance live in Hoxton and respond to "Dave"?

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By hoxtondave
17th Feb 2020 15:43

Haha! I used to live in Hoxton. Not me we are talking about here, though :)

Can I simplify and just reason: company cost, for something provided to the employee for the purpose of the job, reasonable and small personal use, therefore not taxable as a benefit-in-kind?

Thanks,

Dave

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By The Dullard
17th Feb 2020 15:48

Would you have said that personal use was not significant? See EIM21617. An exempt benefit can't be a trivial benefit

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By hoxtondave
17th Feb 2020 16:01

Indeed, not significant. 12 hour days are worked, and people whose job is highly technical computer work do not tend to spend much time on computers as leisure time :)

"An exempt benefit can't be a trivial benefit" - I know, I see what you mean about this now. If a BIK is exempt, it's exempt, and any discussion on triviality is then invalid and irrelevant.

I think that answers the question then. Thanks!

Dave

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Replying to hoxtondave:
Hallerud at Easter
By DJKL
17th Feb 2020 16:14

"Indeed, not significant. 12 hour days are worked, and people whose job is highly technical computer work do not tend to spend much time on computers as leisure time :)"

Tell my son that, he works in front of a screen all day developing software then lives in front of a screen all evening surpassing Pep and Jose; at times the team he manages seems to mean more to him than his mother and myself.

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Replying to DJKL:
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By The Dullard
17th Feb 2020 16:17

But you're not bitter!

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Replying to hoxtondave:
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By Accountant A
17th Feb 2020 20:43

hoxtondave wrote:

Indeed, not significant. 12 hour days are worked, and people whose job is highly technical computer work do not tend to spend much time on computers as leisure time :)

Bet they watch Netflix, Sky, Amazon Prime and all the catch up channels. Bet they shop online. Bet they browse Twitter and Facebook.

Hell, they probably post questions on here posing as accountants.

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Replying to Accountant A:
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By hoxtondave
17th Feb 2020 21:02

No mate, I am a chartered accountant, I just wanted clarification on the point (this is what this forum is for) as I know the Revenue have changed their guidance and interpretations on a few things benefit-related in recent years.

Why would anyone pose as an accountant? It's hardly up there with rockstar, is it?

We run a tech startup around computer security and software development. Hacker vs. accountant - take your pick...bearing in mind the two owners earn more than both of us, combined. Posing as an accountant - get a grip mate. Off you pop to watch Netflix by yourself.

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Replying to hoxtondave:
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By Accountant A
18th Feb 2020 11:52

hoxtondave wrote:

No mate, I am a chartered accountant, I just wanted clarification on the point (this is what this forum is for) as I know the Revenue have changed their guidance and interpretations on a few things benefit-related in recent years.

Wasn't referring to you but rather those who do post on here posing as accountants.

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Replying to Accountant A:
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By hoxtondave
18th Feb 2020 12:04

Really? You can't move for accountants around here ;)

All good banter, in any case!

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Replying to Accountant A:
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By The Dullard
18th Feb 2020 10:40

Even if they watch Netflix, Sky, Amazon Prime and catch up, then, assuming it's not a metered connection, private use is still likely to be regarded as not significant. See EIM21613 for when HMRC accept that private use is not significant.

If the internet connection is provided because it is necessary for the work done at home, then any private use is not significant in such circumstances.

Hell, it's dubious whether s 316 is necessary in such circumstances, there might not be any benefit in the first place based on the proper proportion for the purpose of provision (Masters of Malvern College, aka Pepper v Hart) test in s 204.

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Replying to The Dullard:
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By hoxtondave
18th Feb 2020 12:05

Thank you sir.

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