A family member has their own business, and has asked me this question, I think I know the answer but rather than guess thought you guys may be able to help.
She has business meetings at costa, meeting potential new clients who she is hoping to get to book a party with her. And is asking me if she can claim the coffees as an expense. I think that she can't.
Hi Lee
It's not an allowable expense, so excluded from the tax calculation. Park in entertaining in software.
One of those that could be considered a wee bit unfair. If you rent a room in one of these serviced offices you can deduct the cost, but if you are trying to save on costs by using a coffee shop and paying the price of a coffee for 'rent' then tough. But life ain't fair! And the taxman is a Scrooge!
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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
When I was training I was told that you can record it on the P&L as a genuine business expenses (so it doesn't need to go down as a personal payment or anything like that) BUT you do not get tax relief on it, and you're not allowed to claim VAT unless it's for employees or foreign customers visiting the UK.
Yes Faye is correct - you can put it through as an expense, its just added back to profits when doing the tax computations - like depreciation is. Although some take the proverbial by getting a morning coffee on the way into work, which is defo a personal expense to go to drawings or DLA, but each receipt has to be judged on its merits as with other such things.
Edited for typo
-- Edited by Cheshire on Thursday 6th of April 2017 11:02:18 AM
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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
Could I pick your brain in another similar question that probably doesnt warrant its own thread.
My understanding is if you do work from home (in this case planning parties, paperwork, taking phonecalls etc etc) you can claim a simplified expense of £4 a week I think i read but cant find the article now. Is this correct or am i totally missing the mark?
Also if I used simplified expenses in this scenario, can I still work out actual expenses when it comes to motor vehicles or will that then change to simplified too?
Working from home - two options, briefly as this is a big subject - simplified or proportion of costs. B care is needed re the latter to ensure you dont end up with Capital Gains Tax/business rates charge plus may need permission of mortgage provider or landlord.
Vehicles - an even bigger subject matter. Can go for the mileage rate or claim actual (but can then only change when you change the vehicle) and need to be aware of the tax impacts.
Dont go advising without having PII in place!
Lots on Gov.uk as a start point and then also the manuals. Also - have a search on here, a fair bit recently talked about (dont go further back than this tax year, sorry I mean up to 5 April 2017!)
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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
If you have to travel to the coffee shop, travel which for you is to a temporary place and assuming your travel is allowable so should your coffee be. To buy for another is hospitality / entertainment - as already mentioned, so that's a no - less they are from outside the UK.
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
If you have to travel to the coffee shop, travel which for you is to a temporary place and assuming your travel is allowable so should your coffee be. To buy for another is hospitality / entertainment - as already mentioned, so that's a no - less they are from outside the UK.
Pushing the T&S rules?
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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
I am not offeringadvice really just trying to point her in the right direction she is doing all her own work.
Was thinking she could claim simplified rates for the work at home. But as its not her house its her parents does this have an impact?
Car is a whole seperate issue, she has leased it and thinks she can fully claim back all costs. I said she couldnt as she uses it personally as well business.
-- Edited by Muzzy2kuk on Thursday 6th of April 2017 08:31:49 PM
So she knows about basis periods? Making sure the income is in the correct period? Knows how to create a p and l etc. Understands how to do the tax comes to add back what is disallowed?
Or she just going to do her tax retrun, then panic in a year or three when she hasn't got any accounts and needs them for a mortgage or whatever. Has she even got the structure of her business right?!!
She is heading for a pile of trouble!!! Of course she can claim the total costs of the vehicle and then end up with a massive fat fine and even worse, penalties for messing it up when they eventually catch up with her.
The allowance for use of home is effectively to compensate a sole trader for the extra cost they have incurred, she hasn't go any cost as its not her house.
She needs to get an Accountant. One will save her money in the long run by preventing the penalties etc
__________________
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
