Wear & Tear - The Book-keepers Forum (UK)

morgwick · Senior Member

Wear & Tear

Spamkebab · Expert

Why on earth would you use your home for dog boarding?

I can see the 'backyard' being useful but not the livingroom, or 'parlour' if

you are south of the country lol.

morgwick · Senior Member

They run a home from home pet sitting / boarding / dog walking business. Ive seen quite a few popping up.

Don Tax · Expert

Hi Gill,

Does the council license state that the carpets need to replaced with carpets?
Wouldn't rubber matting or similar reinforce the greater business use of home?

I'm not coming down on one side or the other. If carpets have been ruined then a proportion of the replacement costs should be allowable. However, if they bought a posh domestic, colourful replacement, it might bias an Inspector against their claim.

Interesting case. Another point about the proportion is that the hour or so the dogs are taken out walking means the dogs aren't occupying those separate rooms.

I used to read 'Law Notes' and an FSB publication which I think both used to detail unusual cases like these.

Kind regards,

Tim

morgwick · Senior Member

Thanks Tim, Yes the licence states that either the carpets need replacing when soiled beyond repair, or they should be replaced with wooden flooring. My client didnt want to put wooden flooring in some of the rooms. I know i can claim a proportion of the costs when they happen, but was wondering whether a wear & tear allowance would make more sense. My other post on use of home calculation was querying how best to calculate it due to the soley and exclusive business use rule. Quite a difficult one to judge.

Shamus · Forum Moderator & Expert

Hi Tim, Gill, Neil,

I would very much come down against this and say that no wear and tear or replacement cost would be allowable.

The furnishings fail the wholly, necessarily and exclusively test.

Let me expand.

The furnishings including carpet were purchased for the owners enjoyment of the house.

In furnished rented accommodation where wear and tear is an option (alternatively replacement basis but not original purchase cost) the furnishings are part of the package for the client which is an expected part of the service and quite different.

That the carpets and other furnishings are destroyed by running a business is nothing to do with their original purpose which was nothing to do with the business. I see no reason why the tax system should compensate the owners for loss of assets not part of the business and not necessary to the business.

At best such is an insurance claim, although an insurance company is likely to tell you to go away as it is unlikely that using one's home as a kennel is going to be claimable.

As for the whole concept of running a house as a kennel... It goes beyond a joke.

Your own dog is fine and a treasured member of the family (I'm very much a dog rather than cat person). Boarding other peoples worried pooches (their owners are away, they will be panicing) will result in howling dogs, urine everywhere, destroyed furnishings, etc.

The council will have stipulated being able to separate the dogs but if they get a sniff of a strange dog in the next room also say goodbye to the wallpaper

If this person has neighbors I would expect for the business to be closed down inside a couple of months either by council noise abatement or public health regardless as to whether the council actually gave permission for the business in the first place (which will prove to be another great example of non joined up thinking by the council).

If they do not have neighbors this may cost them an awful lot in cleaning and repairs that to my mind (see above argument) will not constitute an allowable expense.

There is a reason that Kennels are mostly situated on farms well away from other houses and with dedicated accommodation for the homesick pets. In that scenario almost everything would be claimable as the accommodation does pass the wholly, necessarily and exclusively test

Well, that's my take on things which in this instance is out of kilter with Tim's... Which could make for the beginnings of an interesting debate (love a good debate me),

kind regards,

Shaun.

Don Tax · Expert

Hi Shaun. Great post and I've come to expect no less. I might have to disappoint you this time with regards to a debate lol

However, as far as the debate has currently gone, you've helped me clarify that I can't fit the dog-boarding square peg into the 'Furnished Lettings' round hole of rules made for people, for whom the design of furniture, decor etc are really intended.

I think we might be in agreement that carpets, wallpaper etc are not necessary for dogs. I'm reading this statement:
"expected part of the service and quite different."

(I wonder if this thread should be joined with the other one titled 'More than just a home' as that one touched on both business proportion and capital gains.)

I do have a question which may advance the question : Just because an item, (say a driving instructors car) wasn't purchased for a trade, doesn't mean it can't be introduced. Original purpose doesn't apply in every case. Not sure that 'Wholly & Exclusively' is the fulcrum here, nor 'Original Cost'. 'Replacement Cost' might be at issue though, but I hold that it depends on what it is replaced with.

If the proprietor chooses to ruin a perfectly good domestic carpet, that's their problem, but if they replace it with something designed specifically for dogs, then I don't see why it should not be allowable.

Oh My! We could be in for a debate after all, Lol.

Good stuff. Kind regards,
Tim

Shamus · Forum Moderator & Expert

Hi Tim,

Ah, yes, but in the case of the driving instructors car even though failing on the wholly and exclusively test, the business could not be performed without the vehicle whereas a kennel is more than capable of operating without carpets (sorry, must be having a really sad day as I'm almost in tears of laughter at that line).

Anything purchased purely for the business would be an allowable cost of the business. Such as, as you suggest, a specific type of floor covering necessary to run the business (care here must be taken between the business here and the setting within which the business is run).

For example, the carpet argument wouldn't get anywhere but the purchase of one eighth to quarter inch fitted pet proof rubber flooring would be wholly and exclusively for the purpose of the business (can't imagine anyone arguing that they have a thick black rubber floor by choice).

Similar argument for pop riveted on metal door linings to make them scratch resistant. but in that instance rather than avoiding a health hazard (as with the flooring) then you would argue that to not have metal linings would see the doors ripped to shreds which would mean that the dogs could not be contained.

... Who the heck would want to live in this house after it had been made into a kennel!

My impression is though that the person setting up this business (yer right!) will not be looking to incur major expenditure which will devalue their property but is rather looking for a minimum cost way of making a bit of extra money in these difficult times.

As such they are not going to be in the market for the sort of solutions that would attract tax relief.

back to you Tim,

kind regards,

Shaun.

Spamkebab · Expert

White rubber floor, white rubber wall's may be needed for This type of business owner lol

Shamus · Forum Moderator & Expert

Couldn't agree more Neil.

I don't think that they have thought this through at all.

Probably people who have got a dog themselves and are thinking "How difficult could this be".

My money is on that the destruction and devaluation costs will be much more than they ever make from this.

Spamkebab · Expert

It's the smell that i couldn't do with.

There's no getting away from that, imagine living in such a property?

I lose my stomach with some customers cars after they have let fido make a bed of the rear seat.

Rhianrach · Expert

Yeah it reminds of when I thought it would be a good idea to open a petting zoo in my front room, it wasn't long before I realised it was a bad idea ..........

Amanda · Expert

I love dogs but can imagine the smell if you have loads in your house! Neil you ought to see the inside of my car and I only have kids in it no dogs!

Wella · Expert

Having just read BIM47810, I think the problem would be identifying when there was exclusive business use of the room where the dogs were. I am only guessing but I cannot imagine that the dogs are left in the room with the TV remote, with no one elese in attendance

BIM47810 relates to sole traders, and not to directors or employees, who have slightly diffrent rules, as far as I can see. It does allow for a proportional allowance but only when part of the home is used exclusivley for business purposes for at least a part of the day. So if you work in the living room while the rest of the family are watching TV there, no allowances an be claimed but if you work in the living room, kick everyone out for for 8 hours them a proportion of household expenses can be claimed.

http://www.hmrc.gov.uk/manuals/bimmanual/BIM47810.htm

Bill

Shamus · Forum Moderator & Expert

I'm the same with Dogs Amanda,

the real issue here is not just the number of dogs but the fact that the dogs will be panicking because they don't know where they are or why they are there or where their owners are.

Also, if they get a whiff of another dog they will be marking their territory.

Get that into the carpets / floorboards and it will take months to get out.

As I say, I don't think that this has been thought through at all.

Don Tax · Expert

morgwick wrote:
Thanks Tim, Yes the licence states that either the carpets need replacing when soiled beyond repair, or they should be replaced with wooden flooring. My client didnt want to put wooden flooring in some of the rooms. I know i can claim a proportion of the costs when they happen, but was wondering whether a wear & tear allowance would make more sense. My other post on use of home calculation was querying how best to calculate it due to the soley and exclusive business use rule. Quite a difficult one to judge.

Hi Gill,

I expect the reason why will also be the reason why little of the replacement costs are for business use. They'd be renewing carpets pretty frequently and possibly not running a business in order to make a profit. If they're not making much money, then do they want to set a loss off against other income?

As in the other postings, I don't know if the Wear & Tear rules for furnished property have ever been applied to dog-boarding (new winter sport?) and it might be worth poking around some of the pet-owner club sites to see if this has ever been done.

I wondered from your original posts on the other thread that you might have read the 'Use of Home' examples on the HMRC site. If so, then strenuous arguments for made for electric, rates, insurance and otherwise domestic costs.

Hope airing these matters helps.

kind regards,

Tim

Shamus · Forum Moderator & Expert

I knew that the sniff (forgive the pun) of a good tax debate would drag you back in Bill :)

Don Tax · Expert

Can someone mock-up a picture of dog-boarding in an alpine setting.

Wella · Expert

'morning Shaun

I should be working :( but I do like to try and find answers to the questions that I am not sure about. It helps fill in the blanks, should I ever come across something similar myself.

I was bought up with working dogs (sheep dogs and gun dogs), and they were always well treated but never set foot in the house. I don't have dogs now but if I did, they would definately live in an outside kennel.

I got back from a clients about an hour ago who has seven dogs who run amock in the house, and I am constantly pushing them away. They have learned not to jump up at me anymore when I arrive :) Unfortunately, they are spoiled rotten. I went there early once, and his wife was cooking sausages and bacon. I appologised for interrupting his breakfast. Turns out I hadn't, it was for the dogs. I left feeling really hungry. The worst thing is smell, and I often wonder, if I go to another client if I smell of dog. The other thing is it is like walking through a minefield going to and from the car.

Didn't Sheila get bitten by a clients dog once? A lesson for all who have clinets that have dogs on the premises

Bill

Amanda · Expert

Talking of smells, I have a client who smokes when I am working at her house. I am a non smoker and really hate the smell, I come out of there smelling and I am convinced other people that I see or see at school during that day must think I smoke!
I have to go home and change my clothes but I can still smell it, it gets up your nose and is disgusting! (Sorry to who those who smoke).

7 dogs running riot in the house, god how awful! They would drive me mad am I am a real dog lover.

Shamus · Forum Moderator & Expert

Hi Bill,

Yes she did but don't know whether she ever received any compensation for it.

I haven't had dogs myself for a long time as I work away too much and that would be unfair on a dog.

When I did my dog always lived in the house but I would not put up with even one accident on the carpet. Like horses they are intelligent enough to know when they have done something that they should not have so smell was never a problem but hair all over the place was.

I've been brought up with Golden retrievers. Apparently it was one of them that taught me to walk by walking along slowly with me clinging on then if I fell she would sit and wait for me to get up again.

I don't know if this is applicable to all dogs but mine would always lie guard across the bedroom doorway at night and would not move until you get up in the morning. That exact same trait has been applicable with all three retrievers and the Labrador that we've had in the family.

Devoted as the dogs were though they would never have got a fried breakfast!... And they didn't even get many of the goodboy chocolate drops (but I did spend my youth with nice shiny hair and a wet nose, lol).

Right, like yourself I should be working but just keep getting sucked back onto the site.

talk later,

Shaun.

morgwick · Senior Member

Wow, can't believe how negative people have been for someone actually trying to run a decent business! How they live is surely not of our concern, but I want to be able to give them the best advice that I can for their business. They have been running the business since April, pays subcontractors a commission for dog walking, does dog boarding 6 days a week and IS making a profit. They use the rooms mainly at night when dogs need to be kept separate and also use backgarden in the day.

The only time that I can see the rooms being solely and exclusively business is when the dogs are locked up during the night. So this is what I have advised.

If you run an office from a bedroom for example, and you decide to paint the exterior walls of the house, you can claim a proportion based on the business use (as per HMRC's example). So I don't see why the client can't claim the business use of the carpet replacement for a room that is used for the business (the rooms are identified on the licence, so claiming a bedroom carpet can't be included for example). The carpets being bought are not "high end designer carpets", one bought cost £400, the business proportion would be £72. Time will tell how often the replacements take place.

Shamus · Forum Moderator & Expert

I would not accept a client smoking.

If they lit up I would leave.

If they want you to work at their premises then such becomes a work environment even if it is also a home and it is not legal to smoke in a work environment.

I'm quite happy to drop a client, any client who flaunts that.

I do have clients who smoke and quite often they will have one outside before coming into my offices (sure that I'm not that frightening). The entire meeting I find the stench absolutely abhorrent but unfortunately whilst you can stop people smoking you are not allowed to make them gargle mouthwash and change before a meeting.

Don Tax · Expert

morgwick wrote:
Wow, can't believe how negative people have been for someone actually trying to run a decent business! How they live is surely not of our concern, but I want to be able to give them the best advice that I can for their business. They have been running the business since April, pays subcontractors a commission for dog walking, does dog boarding 6 days a week and IS making a profit. They use the rooms mainly at night when dogs need to be kept separate and also use backgarden in the day.

The only time that I can see the rooms being solely and exclusively business is when the dogs are locked up during the night. So this is what I have advised.

If you run an office from a bedroom for example, and you decide to paint the exterior walls of the house, you can claim a proportion based on the business use (as per HMRC's example). So I don't see why the client can't claim the business use of the carpet replacement for a room that is used for the business (the rooms are identified on the licence, so claiming a bedroom carpet can't be included for example). The carpets being bought are not "high end designer carpets", one bought cost £400, the business proportion would be £72. Time will tell how often the replacements take place.

Hi Gill,

My apologies - just throwing profit into the mix after I made a case for replacement costs in both my first two posts, then moved it on to 'possibly not making a profit'. Only saying, they could be making less of one and wondering if you knew of any reason why.

It may be there are sound business reasons for wanting a carpet and not rubber, wood or other material but stick to my original comment that it could bias an Inspector, if there aren't. The business is called 'boarding and walking', so by definition, the rooms are not being occupied when they're in the park. It was interesting and thought your question would receive a good airing once the ball got rolling.

No harm intended - just questions.

kind regards,

Tim

morgwick · Senior Member

Thanks Tim, no harm done..., sorry having a difficult day!. I've seen a lot of businesses struggle recently, including my own, so its nice to see someone make a go of it and I'm passionate in helping them as much as possible... but admittedly they probably haven't planned everything as well as they should have, so expenses are cropping up that now raises this debate as to whether they are allowable...

I feel that it is down to me to ensure that we don't overclaim, especially as she doesn't want an accountant, she's doing her own filing! At the same time, she thinks the amount I am allowing is low given the amount the house is used.

The impression she gave me is that all dogs that are taken in for overnight boarding are all house trained, but accidents are bound to happen. I am going to ask her whether the rubber floor covering is an option.

Oh how it would be nice if things were straight forward for all clients!

Spamkebab · Expert

Nappies, Pampers are what you need, wholly, exclusively and necessary for the purpose of business.

I don't think HMRC would try and wriggle out of an expense claim for Doggy Terry Towels lol.

morgwick · Senior Member

Lol.. that would raise a few eyebrows.. 5 dogs running around wearing nappies!

I've just rang HMRC to get some advice, but they haven't come across this style of business before so couldn't really comment! I find this hard to believe so I'm now waiting for a tax inspector to call.
She did think however that claiming a proportion of the replacement carpets is reasonable, and confirmed that there was no wear & tear allowance (but then she needs a tax inspector to confirm this!!).

I'll wait and see what happens.

Don Tax · Expert

Great, Gill. It's getting somewhere.

I don't know if Neil intended the pun but you could say 'nappies for doing the business.'

Let us know what happens.

take care
Tim

morgwick · Senior Member

Just got off the phone to the HMRC inspector who has informed me that because the business is being run as a "home from home" boarding experience for dogs, it is entirely reasonable for the likes of carpet replacements to be reclaimed as an expense using the business use proportion calculation, providing the solely and exclusivity rule is adhered to and also as the licence stipulates replacements to avoid cross contamination. However, he would prefer to see more hygienic flooring if possible, but understands that putting a rubber flooring cover in all rooms is probably not practical and could be compromising the home from home element of the business. He also had a look through his documentation and cannot see any reference to a wear and tear allowance for this type of business run from home.

It did help in that the inspector has just put his own dog into boarding, where boarding was the home from home experience and not a kennel in the garden, so he knew what type of business it was.

As long as documentation was kept on how the business use element was calculated, the licence supports the business use claim and the business model reflects these type of expenses (e.g. if there is boarding all week then its reasonable to say the business is contributing to the maintenance of the house, but if only run 2 days a week it wouldn't) then he can't see HMRC querying this.

Spoke with the client and to comply with the licence the dogs must be locked up in separate rooms during the night, and they must also be given at least 1 hour of time on their own in their rooms during the day. So this helps with the solely & exclusive test.

Just hope HMRC don't change their minds now!

Don Tax · Expert

Great news that and nice coincidence that the Inspectors interest was piqued by his just having used a similar service.

You and I know that the 'entirely reasonable for the likes of carpet replacements to be reclaimed as an expense using the business use proportion' could be abused and carpet invoices don't always state which room or even an address. That might be half the reason why HMIT has put in the caveat of 'prefer to see more hygienic flooring'. However, it is all a very empathetic answer, so well done you.

Not surprised about the Wear & Tear allowance but was worth ruling out.

Bet you'd like it in writing too, Gill. I'd put exactly what you've said here on the white space of the self-employment pages, adding only the Inspectors name, date, time and phone number. In fact, I might do that every year. Not being negative, just miss the days when you'd get it in writing.

kind regards,

Tim