Rented accommodation

[eek]

I think the posts here demonstrate how people in this site work:-

There are those (me, NLUK, Faqqer) who operate on the basis of what can we do that's easy and won't annoy HMRC

and those who operate on the basis of how far can I push the boundary as HMRC will never know. Which is fine if HMRC don't find out, but potentially very expensive if HMRC do find out...


This is definitely a case where its pushing the limits while providing HMRC with multiple means of attack....

[TheCyclingProgrammer]

Laptops are a poor example as there is an understanding that some home use is allowable on them.

I don't think there is a specific exemption for laptops. The point is that "wholly and exclusively" relates to the underlying purpose, not its use.

A laptop could be used for non business reasons the majority of the time and still be wholly and exclusively for business purposes.

Of course, the more personal use there is, or the more evidence there is of something potentially having duality of purpose, even of there actually isn't, then the higher the risk of something being challenged.

As I said before, I don't think OP should avoid claiming for his accommodation just because his girlfriend is staying. I think they should consider whether the expense is wholly and exclusively for business purposes or if they are really only renting because it would be beneficial for both of then in which case there is duality of purpose. Only OP can really know this and has to make their own mind up (and of course all the other rules about accommodation need to be considered too).

And I think the point about HMRC not finding out here is also reasonable, so long as OP really believes the expense is wholly and exclusively for business purposes. It's not about having a cavalier attitude to expenses, it's more about not worrying about HMRC querying what is probably a valid expense over something they are unlikely to ever know.

The question was does OPs girlfriend staying make it unclaimable and I really don't think it does, not in itself.

[northernladuk]

I don't think there is a specific exemption for laptops. The point is that "wholly and exclusively" relates to the underlying purpose, not its use.

A laptop could be used for non business reasons the majority of the time and still be wholly and exclusively for business purposes.

Of course, the more personal use there is, or the more evidence there is of something potentially having duality of purpose, even of there actually isn't, then the higher the risk of something being challenged.

Well I think you are wrong. It's widely accepted that your works computer and printer has some personal use and no one blinks an eye. I have no examples of legislation, it just is. A company car on the other hand has duality of purpose just sitting on your drive. There is a common sense approach to some things and others are to the letter. Computing equipment has a common sense element to it so is a bad example comparing it to accommodation.

[TheCyclingProgrammer]

Not sure how a company car is relevant here. A company car will normally be an allowable expense for a company as it's wholly and exclusively for the business purpose of providing an employee benefit. No duality of purpose there.

However there is quite clearly a benefit for the employee which is why it incurs a tax charge.

Now take the OPs example. Let's say for instance, OP rented accommodation to save on travel to their temporary workplace and returned on weekends. 24 month rule not an issue. OP passes the wholly, exclusively and necessarily rule and the expense is allowable. There is a sole business purpose for the expense.

After a month OPs girlfriend decides to stay with him during the week. Has the underlying purpose for the expense changed? I don't see how it could have.

[eek]

Well I think you are wrong. It's widely accepted that your works computer and printer has some personal use and no one blinks an eye. I have no examples of legislation, it just is. A company car on the other hand has duality of purpose just sitting on your drive. There is a common sense approach to some things and others are to the letter. Computing equipment has a common sense element to it so is a bad example comparing it to accommodation.

I think the argument you have there is the one of what is a perk and what is a necessity.

A computer and printer is a necessity to do work in this day and age. It may be dual purpose but would you willingly accept a work computer if you were taxed on it.

The company car has always been a perk and as such is taxed.

Weekday accommodation is a necessity but only if its restricted to purely work related occasions. As mentioned above if HMRC perceive it to be being used for anything that is not purely work related they rapidly regard it as a perk.... You only have to look at the recent Tax Tribunal on this topic regarding Tim Healy Tax fight for Auf Wiedersehen Pet star Tim Healy over income tax on London flat - Chronicle Live where

Officials at HM Revenue & Customs disagree. They argue that the London flat was his "base" at the time and therefore he should pay tax.
....
In a written ruling published on a legal website, two appeal judges said the tribunal should establish what was in Healy’s mind when he entered in a tenancy agreement.

and if the question HMRC currently favours is has "the property become the base", moving girlie there rather confirms that question...

[northernladuk]

I was just pointing out computer equipment was a bad example when trying to compare as Sal was trying to do.

[TheFaQQer]

I don't see how the company providing free accommodation to a non-employee can be justified as being wholly and exclusively for the business.

Would the company provide the same benefit to someone who was not in a relationship with the company owner? No.

If the OP can argue successfully that the expense was wholly for the business, and can convince HMRC of that, then that's great. If the OP can avoid an HMRC investigation, then that's even better because they won't get caught. One of those scenarios is more likely than the other, in my opinion, so it's also a question of the approach to risk for the OP.

So far, there's been no comment from an accountant on this thread - it would be interesting to read what some of the professionals make of the situation.

[TheFaQQer]

Not sure how a company car is relevant here. A company car will normally be an allowable expense for a company as it's wholly and exclusively for the business purpose of providing an employee benefit. No duality of purpose there.

However there is quite clearly a benefit for the employee which is why it incurs a tax charge.

Now take the OPs example. Let's say for instance, OP rented accommodation to save on travel to their temporary workplace and returned on weekends. 24 month rule not an issue. OP passes the wholly, exclusively and necessarily rule and the expense is allowable. There is a sole business purpose for the expense.

After a month OPs girlfriend decides to stay with him during the week. Has the underlying purpose for the expense changed? I don't see how it could have.

But reading the original post, this isn't what the OP is talking about. He is talking about renting a flat now, for him and his girlfriend, and getting the company to pay for it all. That doesn't sound like the purpose is changing at all - the purpose from the outset is for the company to pay for him and his girlfriend to live together and not pay for it themselves.

[eek]

I don't see how the company providing free accommodation to a non-employee can be justified as being wholly and exclusively for the business.

Would the company provide the same benefit to someone who was not in a relationship with the company owner? No.

If the OP can argue successfully that the expense was wholly for the business, and can convince HMRC of that, then that's great. If the OP can avoid an HMRC investigation, then that's even better because they won't get caught. One of those scenarios is more likely than the other, in my opinion, so it's also a question of the approach to risk for the OP.

So far, there's been no comment from an accountant on this thread - it would be interesting to read what some of the professionals make of the situation.

But that is not the HMRC argument. The HMRC questions are:-

1) is it wholly for business
2) has it become his base...

While he may be able to argue 1 (and I doubt it) he definitely would be hard pushed to argue 2 with girlie being there...

[TheCyclingProgrammer]

I certainly agree that HMRC don't seem to like employers providing living accommodation, even if it's only because it's cheaper than a hotel. I don't fully understand why they make the distinction, but they seem to consider it as having an intrinsic duality of purpose regardless, as shown in the Healy case.

Is the idea that only staying during the week makes renting a flat acceptable something that is backed up by HMRC guidance or is it simply yet another thing they haven't challenged yet?