Live lobsters and fart machine – valid expenses?by
There’s been a lot of gutsy expense claims from employees over the years, and some shameless demands from political figures. Maddy Christopher reviews some of the most outrageous cases put under HMRC’s nose.
A mass purchase of sex toys from China, a full Lederhosen outfit, two live lobsters and a fart machine are just some of the most unusual claims that have legitimately been classed as “reasonable and genuine expenses as a direct result of business”.
Recent research into expenses revealed that, despite some very bizarre claims, around £5.6bn goes unclaimed each year due to a lack of confidence in the expense process. Many business owners often need reminding that reasonable costs directly linked to running a business are valid, even if they seem strange.
However, this is not an issue for everyone – particularly those in positions where their knowledge of legislation enables them to expense to the best of their ability.
Expensing during a global pandemic
Most recently in the news for exploiting expense was the Bridge of Weir, Bishopton and Langbank councillor James MacLaren who claimed almost £1,000 in travel expenses during lockdown.
Despite all elected members being told to stay home and limit work trips to the absolutely essential, Renfrewshire Council still repaid MacLaren £969.65 during 2020/21 tax year for travel expenses.
“[T]here have been massive financial strains on the council” during the pandemic, demanded Labour councillor Carolann Davidson during a council meeting. “So I would really like to know how James MacLaren can justify claiming nearly £1,000 in expenses when not one other councillor has claimed as much as a penny?”
MacLaren refused to comment during the meeting but later insisted his claims were in line with council policy.
During 2019/20 and 2018/29 he successfully expensed £3,170.45 – almost £1,000 more than the sum of all his counterparts over the same period.
Expense abuse from up top
Many political figures have come under fire for abusing expense policies in the past, but with the economical strain of a global pandemic putting immense pressure on taxpayer pounds, the unscrupulous claims of 2020 from Conservative MPs are, perhaps, less forgivable:
- Michael Fabricant, the Conservative MP for Lichfield, spent £1,074.00 on a mobile phone. He purchased an iPhone 11 Pro with a two-year guarantee.
- Nicola Richards, the Conservative MP for West Bromwich East, spent £479.00 on office equipment from MADE.COM.
- James Sunderland, the Conservative MP for Bracknell, spent £450.00 on a constituency bible.
- Peter Bone, the Conservative MP for Wellingborough, spent £318.00 on a frosted window film to windows.
These MP claims have all passed as ‘allowable expenses’, whilst the Home Office has failed to explain numerous expenses paid out in 2020. Migrant rights campaigner Mary Atkinson revealed the following entries in the Home Office expenses logs.
- 23 December: £669, Rachael’s Kitchen Limited, parent company of Rachael’s Cupcakes brand
- September: £5,415.90, Primark
- 15 June: £849.50, SportsDirect
- 2 April: £864, Hair There and Everywhere
- 6 April: £30,000, Global Beauty Products Limited
- 6 March: £2,022.64, Neptun Qtu Tirane, an electronics store in Albania
- 9 March: £1,040.69, Folkestone Garden Centre
- 12 March: £3,774.29, Pollyana Restaurant
- 13 March: £919.81, Entertainment EB
- March: SP Beautiful Brows: £77,269.40
- 26 February: £3,952.76, Pollyana Restaurant
- 27 February: £900, The Magdalen Arms
- 24 January: £2,000, Claudia Lamb Independent (a diet consultant)
Looking at Home Office expenses from 2020 and there's some WILD stuff in there
Someone who works for the Home Office in Folkestone is having a great time:
- £1700 to a theatre there on 28 Jan 2020
- £1200 at a bakery called Oh Crumbs on 6 Feb
- £1040 at a garden centre on 9 Mar
— Mary Atkinson (@MaryCAtkinson) February 18, 2021
Abuse of expenses by political figures has been a recurring theme over the years, and might explain why many businesses are warier than needed. 44% of SME owners fail to claim business expenses for fear of penalty fines and being unsure what qualifies as a legitimate expense.
Clients often rely on their accountants to remind them that avoiding full use of business expenses could harm business profits, and that any expenses directly linked to business are legitimate.
HMRC allows business owners to deduct costs incurred in the running of the business from its taxable profits, so any reasonable costs that arise as a direct result of the business are considered allowable expenses.
“HMRC’s guidance around what qualifies as a legitimate business expense can be vague and confusing and fines for getting it wrong can be high, so it is unsurprising that so many SME owners avoid claiming altogether,” said The Accountancy Partnership MD Lee Murphy.
According to business owners asked by The Accountancy Partnership, the most unusual expenses claimed and accepted by HMRC include:
- An adult-sized pink tutu
- Taking a customer to a strip club
- Two live lobsters
- Materials to decorate a car as a space rocket
- Mass purchase of sex toys from China
- A Venus flytrap plant
- Visiting a tantric workshop
- A fart machine
- Visiting Victoria Falls National Park, Zimbabwe
- A full Lederhosen outfit
- Cremation costs
“Expenses that occur due to business circumstances are allowable in most instances, no matter how dubious they may seem,” added Murphy.
“Of course, fines can also seriously harm small businesses, so it is crucial to keep meticulous records of expenditure and financial documentation to support any expenses submitted in case they are queried by HMRC.”