I was wondering about the general principles of allocating to to the COA the costs of setting up and running your own practice webiste. I've seen comments that business cards should be allocated to Advertising rather than Office Expenses/General Overheads etc and was wondering if the same should apply to a website, as after all it's primary purpose is surely as an advertising vehicle to attract clients.
varies on the type of business with some web businesses it being a cost of sale.
For most where the website is simply online advertising rather than a direct sales platform then I expense as advertising. (Thats the approach that I have for my own website).
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Web businesses where they buy in websites and sell them on.
Seems that there are companies normally in America (although I suspect that from there things are traced back to India) that build websites to various preset themes on an industrial scale.
I've only got one that does that (its the one where I have huge numbers currency translation paypal transactions). They buy the sites in on bulk then they personalise the sites and sell them on.
Don't ask me how it all works I just know that my client pays x amount to an American company to get the websites which are 90% finished products that he then sells for y amount to UK punters making the websites a cost of sale.
I can't help but feel that this is another one of those things like management accountancy and IT development that used to be an artform but is being turned into a production line.
All the best,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Did we not discuss this at length one time and there was potentially an element of fixed asset. I seem to recall HMRC quotes that a website is akin to a shop window. I still think advertising is the best place unless it is a very expensive, all singing and dancing e-commerce site, in which case it may need capitalising.
I put my web costs in admin expenses, near PC and computer costs.. 75XX... but advertising is fine, too.
I believe the website which sells something (other than your identity) is required to be capitalised, though certain planning elements of this can still be taken to the PL. I think the idea is that, by, say, having an ordering system, it is tangibly contributing to sales, and so it has to be allocated over useful years. Then the updates/maintenance would go to the PL.
Toolkit bumf, below....
Even though expenditure on website development may be shown in the accounts as advertising, marketing or IT costs, this does not necessarily mean that it is allowable as revenue expenditure. In order to identify the correct tax treatment the exact nature of the website costs should be examined.
Application and infrastructure costs, including domain name, hardware and operating software that relates to the functionality of the website should normally be treated as capital expenditure.
Design and content development costs should normally be treated as capital expenditure to the extent that an enduring asset is created. One such indication may be an expectation that future revenues less attributable costs to be generated by the website will be no less than the amounts capitalised.
A website that will directly generate sales, subscriptions, advertising or other income will normally be regarded as creating an enduring asset and consideration should be given to treating the costs of developing, designing and publishing the website as capital expenditure.
Whilst a revenue deduction would not therefore be allowable, this capital expenditure will generally qualify as expenditure on plant and machinery for capital allowances purposes.
Expenditure on initial research and planning, prior to deciding to proceed with development, is normally allowable as revenue expenditure.
-- Edited by FoxAccountancyServices on Thursday 19th of June 2014 12:20:47 AM
