Pricey office chair.

Director has purchased an office chair for £900.

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Doing accounts for a limited company.  Director has purchased an office chair for £900.  Is this an allowable expense to the company and therefore entered into the accounts as such, or should it be put through the DLA?  Rules say he is entitled to £4 a week working from home.  Grey area, do I treat him as an employee in which case the company is obliged to provide a working enviroment, though I am uncomfortable with the price.  Or, as a director is it a double claim if the standard "Use of home" allowance is claimed.

Many thanks

Roy

Replies (124)

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By Tax Dragon
27th Apr 2020 12:18

90 comments? I'm not reading through that... has anyone referred to the legislation yet? Specifically, s316 ITEPA.

Some HMRC guidance is at EIM21611 and EIM21710.

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Replying to Tax Dragon:
Psycho
By Wilson Philips
27th Apr 2020 12:39

But the question is about CT-deductibility, which the OP fails to grasp has nothing to do with ITEPA.

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Replying to Wilson Philips:
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By Tax Dragon
27th Apr 2020 16:00

Wilson Philips wrote:

But the question is about CT-deductibility.

Oh. Well that's plain silly.

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By Lutondata
27th Apr 2020 13:29

Always nice to see the charm and helpful nature of subscribers coming through on this format. No confusion with cars, computers. CT and BIK. I didn`t bring up the car, but responded that the rules are clear, they are laid down. The point that the director has bought the chair for use in his home office could have been in ITEPA? I don`t agree with the BIK, I think that's daft. I do agree that its fine to buy a quality chair. I asked a fairly straightforward question and after a number of rants particularly from a small cluster I am happy now with my decision. But do carry on ranting even if to satisfy your own egos?

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Replying to Lutondata:
Psycho
By Wilson Philips
27th Apr 2020 15:15

If you think that the possibility of a BIK arising in respect of an asset provided by an employer (the rules of which are equally clear and laid down) is daft, but that it is sensible to make a private use adjustment when considering CT deduction in respect of an office chair costing less than £1k, then your mind is even more confused than I thought.

Having taken this thread to a 3rd page I'm out of here.

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Replying to Wilson Philips:
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By carnmores
27th Apr 2020 15:12

me too, talk about hubris...

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Replying to Wilson Philips:
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By Tax Dragon
27th Apr 2020 15:59

Was that the OP's contention/conclusion?!

Wow.

There was once upon a time (in a land occupied by Mum's generation) a scheme to avoid BIKs by employees and employers buying assets (specifically, cars, I think) jointly. I don't recall whether it never worked or was overturned by rule changes (and Mum's not here to ask). But could this be what the OP is thinking of?

[Perhaps I should back read some of this thread. Is it amusing?]

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Replying to Tax Dragon:
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By carnmores
27th Apr 2020 16:11

breaking my rule already - only if you're a [***]

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Replying to carnmores:
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By Tax Dragon
27th Apr 2020 16:18

Justin tells me - no, everyone - that I am. I'll let you know if a) I bother and b) I laugh.

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Replying to Tax Dragon:
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By Cheshire
27th Apr 2020 16:43

Don't you mean bovver?

Justin edits most of his posts a couple of hours after every one has read them.

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Replying to Tax Dragon:
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By Lutondata
27th Apr 2020 17:11

I suppose its worth it if you enjoy the smug, self-righteous, snide comments?

The result is from the client:

"This is an ergonomic office chair used only for business purposes"

So all those banging on about BIK should be content and all those going on and on about not dictating, we don`t. we seek advice between us or on this occasion from our fellow agents and we come to a conclusion that is considered and correct.

I`m planning my next question about a director using first class stamps instead of second. That should get a few people going?

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Replying to Lutondata:
Psycho
By Wilson Philips
27th Apr 2020 18:02

Well if we’d had that information at the start the issue would have been dealt with in a couple of posts. No BIK, no impact on CT. Job done.

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Replying to Wilson Philips:
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By Lutondata
27th Apr 2020 19:26

Oh come off it. we wouldn`t have got to 90 odd otherwise! Lets see how many we get to with the stamps?

Keep calm and do carry on, please. Great value

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Replying to Lutondata:
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By Tax Dragon
27th Apr 2020 23:15

No chair is used only for business purposes, unless looking out of the window and checking the time are purely business activities. Fortunately, that is relevant to neither the CT nor the BIK position.

I don't get your stamp analogy. A stamp is put on an envelope that either contains or doesn't contain a business letter. Whether the stamp is first or second class makes no difference to what's in the envelope.

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Replying to Tax Dragon:
Psycho
By Wilson Philips
28th Apr 2020 07:30

Don’t encourage him. He’s clearly a wind-up merchant, finding lockdown life difficult.

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Replying to Wilson Philips:
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By I'msorryIhaven'taclue
28th Apr 2020 10:18

So what's the outcome/consensus? If I've understood correctly:

Luton's most expensive office-chair is fully allowable;
There's no BIK as any P.U. is incidental/trivial/irrelevant;
Nobody much cares in any event.

The suspense is killing me!

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Replying to I'msorryIhaven'taclue:
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By Lutondata
28th Apr 2020 10:24

Ah, I left Luton years ago. Its just a hangover from the past. Originally from West Dulwich. Thanks to my learned friends offering their sage, if slightly spicy advice. Full allowance given. The bloke had reclaimed the VAT anyway!!

I didn`t start the BIK trail anyway, always thought it was a red herring

The question was shared in my office and I just HAD to ask! We had made the same decision anyway but always good to get a "Balanced" view shouted at us.

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Replying to Lutondata:
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By I'msorryIhaven'taclue
28th Apr 2020 10:36

Lutondata wrote:

Ah, I left Luton years ago. Its just a hangover from the past.

University of Bedfordshire, perchance?

Lutondata wrote:

The question was shared in my office and I just HAD to ask!

Eeek! I do hope you're all sitting six-feet apart and in full PPE kit.
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Replying to Tax Dragon:
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By Lutondata
28th Apr 2020 10:19

Oh no! Don`t say I need firm guidance on this one as well? I always go through the postage receipts and calculate the difference between first and second, check it against the list of letters sent from our template. Then if I spot a non business letter leap into my legislation apply the appropriate BIK and consider the P11d entry. Now you are saying that's wrong as well? Oh blimey.

Can we move onto the toilet roll usage next? I`m learning all the time here.

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Replying to Lutondata:
By cfield
28th Apr 2020 10:48

Have you considered the fact that every time you switch the light on someone may not be working at that precise moment? I think you should go through your electricity bills too and apportion the private usage to their P11Ds.

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Replying to cfield:
paddle steamer
By DJKL
28th Apr 2020 11:02

It is worse than that, some photons will escape the confines of the premises and end up lighting the outside world, how can that be W & E for the trade?

Re the expensive chair, did the OP miss the earlier reference to

G.H. Chambers (Northiam Farms), Ltd. v Watmough (H.M. Inspector of Taxes)(1) (1953-1956) 36 TC 711

Which covered the concept of abatement for personal choice.

https://library.croneri.co.uk/cch_uk/btc/36-tc-711

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Replying to cfield:
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By Tax Dragon
28th Apr 2020 11:40

Again, if this is in the office, legislation removes the tax charge; if it's the home electricity bill that the company is paying, the whole lot is taxable (subject to a claim for WEN expenditure/£6pw allowance).

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Replying to Lutondata:
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By Tax Dragon
28th Apr 2020 11:14

I don't think you are learning. That's probably the problem. Although I will grant you that toilet rolls are a better analogy for the chair than stamps were.

So let's work that one out....
toilet rolls bought by the company are allowable (why wouldn't they be)?);
their use is of course personal/private [actually the analogy falls down there, as the chair will have mixed use, although the treatment is under the same law], but it's not the company that's using them privately, it's the director/employee [companies don't have private use; humans do], so, as was the case with the chair, the direct tax issue is the BIK;
if they are used on company premises, s316 removes the BIK;
if they are provided for use at home, the director/employee is taxable.

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Replying to Tax Dragon:
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By Tax Dragon
28th Apr 2020 11:22

For the avoidance of doubt, "they" refers to the toilet rolls alone; I don't see that s316(4) can apply there, whereas of course it can to the chair.

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