I have a client who is a driving instructor and he believes that he should be able to deduct expenses relating to eye tests and unbelievably his sunglasses as he maintains that he cannot carry out his work without them. Whilst I have told him that these are not deductible I would appreciate it if this could be confirmed by anyone out there.
Also, I have another client who purchases goods from EC countries. There is no VAT shown on these invoices so I input them onto Sage using the VAT code T8. However, when the VAT return is printed from Sage is shows VAT on EC purchases and I wonder if anyone knows how that figure is calculated?
I would also agree that the eye test and sunglasses are not deductible.
Both have a duality of purpose as presumably he would use sunglasses to drive for personal reasons as well as for work. Similarly you could point out that the clothes he wears while giving driving instruction could be claimable on the same grounds but are not.
Not being one to keep things simple, a pair of reactor-light spectacles would not be for enjoyment (whilst teaching someone to drive), nor health, as he'd stay healthy without them. These glasses would be bought only for safey. It would be unsafe to change glasses just because the sun came out.
If he wore them outside his work as well, then, to the extent that he wore them for work, the expenditure would be wholly and exclusively for business.
One could argue that his dual-control car, if it is his only car, should be disallowed because it is not exclusively for business.
On your other question: If your customer is UK VAT registered and supplies his VAT registration details to the EU supplier, then invoices are supplied without their local VAT included, as the "reverse charge" for VAT applies.
This basically means that you charge yourself the VAT at UK standard rate 20% and then claim the same figure back.
The reverse charge amount appears in box 2 on VAT return and the same amount is included in box 4 as a reclaim, so the net effect is zero (and thereby pointless, but this is an EU requirement so that says it all).
Who wants to keep things simple (should see my life!!), and in the interests of debate
While I agree that some things are a grey area, the dual use of a car is allowed because a definitive split can be assessed (through mileage logs or statistical calculation) whilst the wearing of sunglasses for driving is a matter of choice (I would argue the motive for wearing sunglasses, a matter of comfort, not safety) and cannot be determined easily between the two uses.
Extract from BIM37007
Apportionment and duality
When you consider the application of ICTA88/S74 (1)(a), it is important that you distinguish between cases where:
A definite partor proportion of an expense has been laid out or expended wholly and exclusively for the purposes of the trade, profession or vocation. That part or proportion should not be disallowed on the ground that the expense is not as a whole laid out or expended wholly and exclusively for the purposes of the trade, profession or vocation.
An expense has been incurred for a dual purpose. Such expenditure should be disallowed.
It is quite easy to raise what would normally be an acceptable arguement for such cases but the reality would be less convincing to our friends at HMRC, and I think that this particular case would fail the tests they would apply.
Just my opinion and am intersted in hearing a different point of view.
Bill
Edit: The bold text in the extract, are from the original text, and are HMRC emphasising a point
-- Edited by Wella on Wednesday 31st of August 2011 10:23:05 AM
Thank you, Ridesy for the information about reverse charge for EU VAT. This has been a minor worry just because I couldn't see the logic. Now I know there isn't any logic I can relax!
The eye tests IMO fail the dual purpose test. I'm not so sure about reactor-light ones, though Kitty said sunglasses. To win the argument with an Inspector, she might have a difficult job proving they were kept in the vehicle, but she can use these points with the client before a tax return is submitted, so he knows the risk.
Thanku all for your comments! The reactor lite glasses may be worth a mention to my client and I will now definitely double check the reverse charge rules in relation to the EC VAT - all very much appreciated.
