I am doing the tax return of a sole trader. She has no office space so meets clients in coffee shops. I realise that sole traders don't get subsistence but in a coffee shop she has to buy a drink so is this an allowable expense? It's cheaper than renting an office and she only pays for her own coffee.
I guess it depends if it is only a coffee she is charging or a lovely big piece of cake as well! If she has records of who she met and the purpose then she shoudl be able to argue it as she couldn't use the coffee shop without buying something
Just to jump on this thread...I have a client who participates at trade fairs over the other side of the country. She has given me receipts for lunches for her and another member of staff. She is a sole trader and VAT registered. Are these claimable too? and the VAT?
I've been a bit busy so not been posting much but I can't leave this one alone whilst people slowly convince themselves that the purchase of beverages whilst working is a tax deductible expense.
Sorry to come along with a bag of spanners but no matter how logical it may seem that one takes up residence in a coffee shop so the purchase of coffee is a legitimate expense, it's not.
Its no different to if you set up in Toys R Us a Lego set would not be a legitimate expense. Also taking up residence in a coffee shop does not make it an office.
The purchase of tea/coffee making ingredients in one's own office is allowable provided that such is provided for the benefit of all staff members (that would be why the stock tea and coffee in Staples).
If you are travelling on business then buying a coffee would be ok.
If you buy a coffee at a local shop its not as it fails the wholly and exclusively test in that you would have bought a coffee anyway, you have just decided that tax subsidised beverages make it convenient to set up shop there.
Coffee is not allowable in the above circumstances.
This is not the same as the attending a trade fair where one is expected to stay away overnight then reasonable subsistence would be allowable.
Do not confuse this with the special rules for long distance lorry drivers who can claim for meals without overnight accomodation.
kind regards,
Shaun.
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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.
I agree Shaun that in following the law to the letter it should not be allowed, but I'd tend to share Marks pragmatic outlook.
If we take it to the nth degree a tax return for a sole trader is not a tax deductible expense, but do you disallow it, or lump it in with the other accountancy fees?
Kris
-- Edited by kjmcculloch83 on Tuesday 14th of October 2014 12:17:59 AM
That would be a pragmatic view, the price of my couple of coffees when I've had to meet people in Manchester versus the hire of serviced offices for a couple of hours. For the latter I pay less tax on the profits depleted by the hire at £50 per meeting. But alas HMRC write the rules because others have taken it to extremes.
Interestingly (well to me at any rate), I've just criticised the misleading advertising of a new phone app for small businesses that collates expense receipts....the one they had on the app was from a coffee shop!! They have promised to put a more suitable receipt on their ads.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
unfortunately I've seen that one advertised on TV plus it pops up regularly before I watch YouTube vids (#1) so I doubt that they will be changing it.
I fear that it's another example that marketing people should not be allowed out unsupervised.
All the best,
Shaun.
#1 clever little machine knows exactly the sort of things to try and sell me... I worry that the pop ups that my son gets on websites are things like "Asian babes want to meet you"... Lol, I think that I know what he does on t'internet when I pop out to Asda!
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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.
Occasional journeys outside the normal pattern and itinerant trades
A deduction is, however, allowable for reasonable expenses on food and drink for consumption by the trader either at a place to which the trader travels in the course of the trade or while travelling in the course of the trade, if certain conditions are satisfied.
A deduction must be allowable for the cost of travelling to the place, or would be if the trader incurred any such costs, and either:
the trade is an itinerant trade at the time the expenses are incurred; or
the trader does not travel to the place more than occasionally in the course of the trade and either:
◦the travel concerned is not part of the traders normal pattern of travel in the course of the trade; or
◦the trader does not have such a normal pattern of travel.
So I would say that if the trader is meeting clients at a coffee shop convenient to their client, it isn't every Monday a 2pm at the same place (i.e. following a set pattern) then I would allow.
Obviously meetings in Starbucks can't be deductible since they pay no UK tax!!
Thanks Rob, thats useful to know. I do have a client that works from home but meets candidates in hotels/cafes etc in random placesand just uses their coffee shops for meetings - Ive always just put this down as entertaining.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
unfortunately I've seen that one advertised on TV plus it pops up regularly before I watch YouTube vids (#1) so I doubt that they will be changing it.
I fear that it's another example that marketing people should not be allowed out unsupervised.
Their bloomin add kept poppping up on my Facebook feed so I had a rant about it and they promised (yeah like I believed that!!). Thought I should point it out to all their enthusiastic fans.
#1 clever little machine knows exactly the sort of things to try and sell me and they laughed about the threat of Big Brother in the 80s... I worry that the pop ups that my son gets on websites are things like "Asian babes want to meet you"... Lol, I think that I know what he does on t'internet when I pop out to Asda! Blaming your son now for your online dating, thats just plain wrong!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Shamus wrote:#1 I worry that the pop ups that my son gets on websites are things like "Asian babes want to meet you"... Lol, I think that I know what he does on t'internet when I pop out to Asda! Blaming your son now for your online dating, thats just plain wrong!
Definitely his history causing that one. If it was Russian girls then I would accept it but wife #3 absolutely cured me of any desire for Asian babes (Although, I think that I may have just had a faulty one... Do you think that you can get refunds or replacements?).
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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.
