David Rosario wrote:

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Good afternoon members,

I have a new client who provides a chauffeur service, and I am in the process of finalising the reconciling of his accounts before entering the relevant figures into an annual tax return. Nevertheless, my new client seeks to claim as much as he can from his expenses and thereby wanting to pay less tax. With this being the case I need some answers to questions that has arisen.

He is not VAT registered and is a sole trader who works from home.

I must admit that I am sure of some of them, via research and commonsense, but I just need reassurance of what is tax deductible and what is not.

1. PO (stamp) receipts - tax deductible or not. I read somewhere that these receipts are not tax deductible; Is this true?

2. Car Wash receipts - tax deductible or not?

3. Petrol receipts - tax deductible or not. I read somewhere that these receipts are not tax deductible; Is this true and HMRC will only accept a mileage log format?

4. Refreshment and Gift receipts for his passengers of his client's - tax deductible or not?

5. Congestion charge fine - tax deductible or not. I read somewhere that fines are not tax deductible; Is this true?

6. Kaspersky Total Security (Internet security) - I read somewhere that HMRC will allow this as tax deductible; Is this true?

7. Parking fine - tax deductible or not. I read somewhere that this fine is not allowed as with all fines; Is this true?

8. He has obtained a Gift Aid donation receipt - what is the situation... he is not a higher rate taxpayer?

 

I apologise for not doing the extensive research in gaining my answers but it is just a matter of time saving, and the bookkeepers forum is my helpful tool.

Kind regards

David

 

 

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 Hi David

That is a hell of a long shopping list!!

Is the tax return late?

Is it paper based or online?

For the 'research' you have already done, what tools do you normally use, ie whose tax manuals or which websites?  

So my knowledge and your data input......how much of the fee are you willing to share 

I'd argue that the congestion charge isn't a fine, but a charge for entering specific area's of London, and is tax deductible.

Parking fines are interesting. Thanks to Johnny I've learned summat new, that parking fines incurred by employees are tax deductible.  I did a bit of research there and also fines incurred by private parking companies are also tax deductible, even f incurred by the sole trader.

I can't see any issue with stamp receipts or car wash receipts, anyone disagree?

Fuel will either be a motor expense after taking into account a percentage deduction for private mileage OR a flat rate 45p a mile up to 10k, and 25p per mile over that, but a few other factors need to be taken into account.  Both are tax deductible.

Agree with Johnny on Kaspersky, my one involvement with it being on a mate's computer and it slowed his computer so bad it was like running through treacle. If the computer was solely for use in the business then I can see no reason for it not to be tax deductible.

He can't put the donation through the business, only Ltd Companies can do that, and no gift aid is allowable 

Certain parking is indeed illegal, but parts dealt with under civil rather than criminal law, but then there is the distinction between who can enforce such and who cannot, via different methods . Eg parking on double yellow lines (unless of course you have a valid and visible disabled sign on your vehicle) = enforcement by Police and/or local councils.  Driving onto a pavement is a criminal offence, albeit the fact that cars are parked on the pavement is often dealt with as if a civil offence (usually due to lack of police!).  There are a variety of driving fines or indeed 'penalty charge notices' for such illegal activity, which even if they are W&E then they are not tax deductible and must be dis-allowed. Then there are the parking fines from private bodies, which are of course a different matter (although might be a grey area). The problem here is that the OP has left all of there examples wide open to us having to make (some wild) assumptions and then also cross arguments for all the wide variety of scenarios that can be covered under the regulations, guidance and rules.

As Mr Mod suggested on another similar wide open question a couple of days ago - each case must be viewed on its merits against all the relevant evidence from clients. (OK his quote was actually ''There's no straight answer as everyone's circumstances will be slightly different'') Would be better perhaps if the OP did some more research against each of the 7 or so scenarios, then put the case for each more fully along with his view which then can be agreed with or countered as required (might be an idea on separate posts too so things dont get too clogged).   I am of course assuming, due to no Qs yet answered,  that this is not an urgent late return so there are several months to get this all squared away.

Eg as a starter just on the fines- where/when/who from were the 'fines' incurred. Some may be allowable, most I would suggest may not be.

Ive not covered the employee position on ones address to them paid by the company (benefit in kind) etc. Like I said - so many variables

Edited to clarify a couple of things/sort typos and add Shaun's quote

Cheshire wrote:

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Just on the fines
So you break the law and its tax deductible? No, sorry it isn't. There is case law.

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I should have read a bit more last night but I was tired.  The article I read also linked to BIM42515 which adds more clarity to the issue.