I have a client who calls himself a business consultant. Have been doing his bookkeeping for 6 weeks now but there was a huge amount of catching up I needed to do which was brought up to date over Christmas. I have noticed that he hasn't claimed for mobile phone bills, internet etc.
He clearly uses his mobile phone for business and also most of his work is done over the net and by e-mail. I know he can claim for these thing but not sure how much of it he can claim for? Same goes for his broadband, he uses this for both private and business purpose. he works fulltime from home so I know he can claim expenses for that, but how much?
For example, if he spends £30/month on his mobile line rental which included free minutes that he uses for personal and private use, do we literally need to go through each call to determine what is personal and what is business? He is VAT registered so how much of the VAT can he claim back and what would be the journal entries for these transactions?
Also, he is a limited company and is the sole shareholder and only director. Should he still be running a payroll for himself? I only take his accounts up to trial balance for his accountant to finish off his year end but for my own knowledge this would be useful to know.
-- Edited by KBS on Sunday 26th of January 2014 08:30:38 PM
-- Edited by KBS on Sunday 26th of January 2014 08:32:05 PM
-- Edited by KBS on Sunday 26th of January 2014 08:56:19 PM
1. Get the mobile contract changed to the limited company's name and put all the cost through and claim all the vat. No BIK for a mobile.
2. Recharge a fair usage of the broadband to the company for business use (as him what the business/personal split is) and also a use of home charge if he works from home
3. Yes should be doing payroll and putting through £641 per month as gets tax relief on this through the company without paying any PAYE or NIC, saves about £1500 in corp tax doing this. Also gets a year's credit towards state benefits main one being pension
For the time being, until I "encourage" him to change his mobile phone contract over, should I portion the bills as a percentage or another way? I'm assuming VAT is not reclaimable until it is in the companies name.
Also, I have only taken on payroll as an ongoing thing and haven't done this since RTI was introduced. Is he able to take the payroll back to the start of his accounting year (May 2013)? or would you suggest just setting it up from now?
Just ask what the business/split is and include that.
cant reclaim any vat
just start the payroll from now and split annual allowance by 3 over the next 3 months. Annual allowance is 12 x £641 which is £7692 (think you can do this though usually leave to my payroll person to sort)
