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Where should tea and coffee go

Which self-employment box should be used for employees tea, coffee, milk, biscuits etc.

Didn't find your answer?

I have been pondering a bit today and rummaging around the net and still not found an answer.  Obviously tea (even if Earl Grey), coffee, milk etc are an allowable expense for a self-employed person when they are used to feed employees (with potentially a disallowance for own use).  If they go as far as chocolate biscuits then vat can be claimed back.  However, what I cannot find an answer to is which box on the tax return to use.  Some use "other expenses(30)", there is an argument for "admin/office(23)", but my pondering makes me think that staff (19) is the right box.  Is there any consistency in this? What would people recommend?

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By Tim Vane
17th Jun 2019 19:00

I would recommend not giving a toss, because it is seriously not worth it.

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Replying to Tim Vane:
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By johnhemming
17th Jun 2019 19:35

MTD for ITSA needs an answer, however. Hence I will go with staff (19).

The problem with software is that once it is coded into the system it does the same thing thousands of times (or more) hence it is worth giving it more than cursory thought.

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Replying to johnhemming:
Hallerud at Easter
By DJKL
17th Jun 2019 20:46

Aha, what about customers etc at meetings who drink your coffee and eat your biscuits, not all may be consumed by your staff.

I tend to go for Misc in our accounts but biscuits are no more, they were a casualty of the 2008 financial crash they got cut back then and have never been reinstated- anyone who wants a biscuit needs to bring their own, except at Christmas as we tend to get given some boxes by suppliers around that time but not enough to last beyond the second week in January.

We are, however, open house re filtered coffee and do have a couple of business associates who seem to visit us just for the coffee.

Caffia Coffee Group supply us with a free machine (we buy our coffee from them, no such thing as a totally free coffee) that does keep the jug hot but it can get a bit stewed after more than 1.5 hours in the pot if it ever lasts that long.

Shameless plug , here is their website, well they were one of my nicer clients at the firm I was with over 20 years ago and if it gets them extra business I might get some free coffee from them.

https://www.caffia.com/about/

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Replying to DJKL:
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By johnhemming
17th Jun 2019 20:50

For Self Assessment the question is a simple one as to which box on the form (or data element in the API json) the figure ends up in.

I haven't tried looking at the iXBRL taxonomies to see if they care at all. They might track, however, if you put butter in the puff pastry in the future.

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Replying to DJKL:
RLI
By lionofludesch
18th Jun 2019 09:40

DJKL wrote:

Aha, what about customers etc at meetings who drink your coffee and eat your biscuits, not all may be consumed by your staff.

I tend to go for Misc in our accounts but biscuits are no more, they were a casualty of the 2008 financial crash they got cut back then and have never been reinstated...

You're having to subsist on Jaffa Cakes, then ?

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Replying to lionofludesch:
Hallerud at Easter
By DJKL
18th Jun 2019 10:45

No cakes either,it is now thin air under my austerity led regime.

It is actually pretty scary when one calculates what biscuits actually can cost each week, my biscuit policy was worth the best part of £1,000 a year to our cashflow.

I am a kindred spirit with Ebenezer Balfour in my quest for saving a bawbee or two

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Replying to DJKL:
RLI
By lionofludesch
18th Jun 2019 10:56

Tunnocks snowballs and teacakes ?

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Replying to lionofludesch:
Hallerud at Easter
By DJKL
18th Jun 2019 11:00

Mmmnn- teacakes. Wonderful inventions and gifts to humanity but afraid not provided in the office.(Re the teacakes beware own brand substitutes, they are just not the same)

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Replying to DJKL:
RLI
By lionofludesch
18th Jun 2019 10:58

DJKL wrote:

I am a kindred spirit with Ebenezer Balfour in my quest for saving a bawbee or two

Is Bawbee the barman at the Clansman ?

Thanks (1)
Replying to lionofludesch:
Hallerud at Easter
By DJKL
18th Jun 2019 11:01

lionofludesch wrote:

DJKL wrote:

I am a kindred spirit with Ebenezer Balfour in my quest for saving a bawbee or two

Is Bawbee the barman at the Clansman ?

Very good, that got me to laugh out loud.

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Replying to johnhemming:
By Tim Vane
17th Jun 2019 23:25

johnhemming wrote:

MTD for ITSA needs an answer, however. Hence I will go with staff (19).

Nope, still don't give a toss. For MTD for ITSA I will just let my software put it wherever the hell it wants. And I still won't give a toss. My clients pay me to do stuff that matters.

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By carnmores
17th Jun 2019 19:07

Employee costs if available to all staff they are allowable? i think most people would agree with Tim V

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By memyself-eye
17th Jun 2019 19:40

both tea and coffee go in a 'cup' - not at the same time though....

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Replying to memyself-eye:
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By johnhemming
17th Jun 2019 19:53

I prefer a mug myself.

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By ireallyshouldknowthisbut
18th Jun 2019 08:45

@John MTD for ITSA is very unlikely to happen.

There is even less rationale for that than for VAT, which as we will find out will collect precisely no extra VAT, which is the whole point of it. Apparently.

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Replying to ireallyshouldknowthisbut:
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By johnhemming
18th Jun 2019 17:36

MTD for ITSA is already live if people wish to participate. The big question, of course, is when it is made mandatory.

I would expect HMRC to move the XML SA functions over to MTD simply because the security control and authorisations are much better. (All this OAuth2 stuff).

They will, of course, see what happens with Vat before taking any further steps. There are, of course, potentially two steps for ITSA - beyond switching the XML interface to json with OAuth2 these are:
a) Requiring people to use MTD for ITSA at the end of the tax year.
b) Requiring people to submit to ITSA during the year on a quarterly basis.

We can but see on this.

On corporation tax I have asked them if they intend moving away from XML. It would be more surprising if they did that because that would mean giving up on iXBRL which I would not expect them to do.

All of the other MTD interfaces appear to be making some progress and again they have the advantage of OAuth2 (which people may now be able to see in practice particularly if they are using software from more than one MTD supplier).

The Agents API, for example, is now live and is quite useful for agents.

Trusts and Estates have gone back out of sandbox as far as I can tell, but will come back in later.

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By fawltybasil2575
18th Jun 2019 09:36

@ johnhemming (OP).

Given that one could validly justify any one of several "boxes", frankly I would always opt for any justifiable box APART FROM the box for Employee Costs.

My reason for so saying is that, in the albeit distant possibility of any form of enquiry from HMRC, in which they request an analysis of Employee Costs, one's response would have to include notifying them of these "canteen" items: this could therefore result in:-

(a) Unnecessary time in responding to HMRC claims that part or all of such costs should have been (i) disallowed and/or (ii) reported as Employment Benefits, and

(b) [Regardless of whether HMRC are right in proceeding with further action against the client] taking the appropriate steps to defend such HMRC action.

In short, whilst in over 99.9% of cases, it will make no practical difference, whatever "box" one decides upon, why take that risk ?

Basil.

Thanks (3)
Replying to fawltybasil2575:
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By johnhemming
18th Jun 2019 11:23

Thank you for this almost uniquely helpful response to the OP.

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RLI
By lionofludesch
18th Jun 2019 09:42

Three line accounts are the future.

Totally useless as accounts, obviously, but at least there are no arguments about what box to put stuff in.

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By JCresswellTax
18th Jun 2019 09:49

Crazy, think I preferred the 'how do I pay myself from my small self-employed company' thread and that's saying something!

Thanks (2)
Replying to JCresswellTax:
Hallerud at Easter
By DJKL
18th Jun 2019 10:47

Which was so good it featured twice.

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By Jdopus
18th Jun 2019 09:51

I think you would be best off analyzing each transaction individually - to keep yourself right.

Start by setting up a log sheet in the kitchen to track who is taking biscuits or tea and coffee and when, this way you can properly disallow biscuits and coffee/tea consumed by clients rather than your own staff members (for liquids you'll probably need to use a pro-rata basis unless you want to introduce scales or some other more precise measurement system).

If you really want to cover yourself add an additional column to allow staff to log the purpose of their biscuit consumption (Are they merely consuming biscuits on a recreational basis or are they consuming them solely for business purposes?).

With that in place, I would set up four different nominal accounts on your ledger:
Milk
Tea
Coffee
Biscuits

Using the log sheet you set up earlier, you can then split each of these individual categories into "Staff expenses" for when staff are eating biscuits or drinking tea/coffee within the office, "Business Entertainment Costs" for when they are consumed by clients (This should be added back) and "travel expenses" for situations where a staff member takes a biscuit for subsistence purposes while engaging in business travel.

This should ensure you properly account for all of these expenses in the appropriate category - hope it helps!

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Replying to Jdopus:
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By carnmores
18th Jun 2019 10:22

You cannot be serious , or is this long windest joke so far?

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By Jdopus
18th Jun 2019 10:31

Very serious - liquids are the tricky part since you need to measure both the solid value using scales (e.g. how much coffee you spoon into the pot) and the seperate liquid quantities of any milk etc, which you have to use a measuring jug for.

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Replying to Jdopus:
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By Wanderer
18th Jun 2019 10:41

One problem with your system is monitoring compliance and how you prove to HMRC that it is your staff rather than the proprietor or clients obtaining the benefit?
Perhaps your system could be refined to monitor toilet visits and you could then correlate these with drink / biscuit consumption?

Thanks (1)
Replying to Wanderer:
Hallerud at Easter
By DJKL
18th Jun 2019 10:54

And so we get back, as Life, the Universe and Everything does, to THHGTTG-

Remember "Bethselamin"

https://hitchhikers.fandom.com/wiki/Bethselamin

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By Jdopus
18th Jun 2019 10:56

I'm confident that as long as the OP keeps contemporary records and properly enforces the line that his record keeping would stand up to an HMRC on-site invigilation.

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By Tax Dragon
18th Jun 2019 10:59

Plus it's finally a worthwhile use for hawk-eye, goal-line technology etc, which has so far been wasted ruining sporting events.

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Replying to Jdopus:
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By Wanderer
18th Jun 2019 11:12

One further thing that worries me about the evolving system is how are we going to ensure GDPR compliance with all these extra records about staff & client eating and drinking habits? Think we might need a consultant in to advise.

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Replying to Jdopus:
Hallerud at Easter
By DJKL
18th Jun 2019 11:04

I see nothing outrageous in what you suggest;- a long time ago a pub client we then had employed a bookkeeper who had within the general ledger a "Lemon Account"

This is not a wind up but the genuine truth, it has remained with me for about thirty years and it was not even one of the clients on my list.

Thanks (1)
Replying to DJKL:
Bramble
By Chris.Mann
18th Jun 2019 11:16

I had a hotel client, who went to some trouble to provide detailed analysis, which included "tights".

When I made further enquiries, the proprietor explained that, when lady patrons laddered, or damaged their "hose", often climbing up from the local beach and cliffs, he was asked if could direct them to replacements?

Reflecting on this anecdote, from the 1980's, reminded me of the Two Ronnies sketch and, the 4 candles. Or, was it fork handles! Days gone by when comedians, were comedians.

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By johnhemming
18th Jun 2019 11:22

Is it right, however, to have an account both for standard rate biscuits and zero rated biscuits, should not the chocolate biscuits be analysed separately.

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By KateR
21st Jun 2019 10:18

@jdopus What about sugar and sweeteners?

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By Vile Nortin Naipaan
18th Jun 2019 13:20

This is one of those conundrums one could easily not lose any sleep over.

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By Open all hours
18th Jun 2019 15:58

Yorkshire tea and coffee in the mornings. Matcha green tea after lunch. But what to do with digestive biscuits, most of which seem to be the property of George the Golden Retriever who happens to celebrate his birthday tomorrow. And yes, we have one client who chose us explicitly because of him. So that leads on to sausage sandwiches, and then the conversation turns to our culturally diverse fridge and the supply of dark, white and milk chocolate. Move slightly left of that and there is the Champagne which is kept on the basis that it is our belief that it should be illegal to own a fridge without any. Any given day can come up with a reason (good or bad) for its consumption, once it was just because it was the best Thursday we’d had that week. Another will be the day that MTD is actually proved to be a benefit in its own right. That, we feel will not be the current bottle or any of its immediate successors.

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By penelope pitstop
18th Jun 2019 17:16

Remember years ago how the taxman wanted to tax cups of tea for office staff as a benefit in kind.

Well, there's your answer. If the taxman thought it was an employee perk back then, treat it as an employee cost as you would for most other benefits.

Otherwise office admin. Or even sundry other costs (along with newspapers and glossy mags in the waiting room).

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Replying to penelope pitstop:
RLI
By lionofludesch
18th Jun 2019 17:28

penelope pitstop wrote:

Remember years ago how the taxman wanted to tax cups of tea for office staff as a benefit in kind.

Hence the Trivial Benefit régime. Bet they wished they'd kept quiet.

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Replying to lionofludesch:
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By Vile Nortin Naipaan
18th Jun 2019 17:41

No need for the trivial benefit regime. This was always exempt under the canteen exemption, which covers any food or drink consumed on the employer's premises.

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Replying to Vile Nortin Naipaan:
RLI
By lionofludesch
18th Jun 2019 18:06

Agreed - but it's not what the lunatic said at the time.

I can't recall how much she assessed but it was a five figure sum.

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By Janski
21st Jun 2019 12:29

But how should you treat the additional cleaning costs from all the crumbs?

Should you split the additional cost of hoovering up the employees and clients crumbs (allowable cost) and separately identify the hoovering of the owners crumbs (potentially not allowable cost).

Should the owner agree to only eat biscuits of a different colour to everyone else, so the hoovering split can be better analysed and controlled?

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By tracey2412
21st Jun 2019 10:46

Thank you all so much - this made me smile & feel better at the end of a frustrating & difficult week when I was beginning to wonder if it was all worthwhile. If we can find humour in it, it's worth hanging on a bit longer! Thank you all - have a fabulous weekend!

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By bendybod
21st Jun 2019 15:18

And a potential sunny weekend at that!

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By Ammie
21st Jun 2019 10:51

Yep, just checked the date, it's not 1 April. I thought we had passed it.

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RLI
By lionofludesch
21st Jun 2019 12:04

However, June is the season that shops are selling stuff for April Fool's Day.

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