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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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.
But the question is about CT-deductibility, which the OP fails to grasp has nothing to do with ITEPA.
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.
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?]
Justin tells me - no, everyone - that I am. I'll let you know if a) I bother and b) I laugh.
Don't you mean bovver?
Justin edits most of his posts a couple of hours after every one has read them.
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.
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.
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!
Ah, I left Luton years ago. Its just a hangover from the past.
University of Bedfordshire, perchance?
Eeek! I do hope you're all sitting six-feet apart and in full PPE kit.The question was shared in my office and I just HAD to ask!
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.
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.
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).
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.
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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