Claiming expenses for a big fat luncheon?

[oxtailsoup]

My contract is up for renewal and I'm planning on taking my project manager and his boss out for a fancy luncheon next week to oil the wheels of commerce etc.

Can I claim for this expense through my limited company?

[malvolio]

Yes of course, but don't claim the VAT back (if you're on the flat rate scheme, that doesn't matter, of course).

[oraclesmith]

Really ? Isn't this business entertainment and not allowable as an expense against profits ? Your company can pay it, but it will have to pay corp tax on it. In my opinion.

[malvolio]

Nope. Asked my accountant about it a while back, since I used to run team meetings over lunch. Perfectly acceptable business expense, since they were my team, but not allowed to be offset as VAT since it is entertainment, not a provision of a service, hence no added value, hence no VAT

However, buy a meal for yourself and you can have the VAT back, since that is a business expense.

[ratewhore]

OracleSmith is right, you can't offset against corporation tax but your company CAN pay it.

This is the information from my accountant, who is also Malvolio's accountant...

[malvolio]

OK fair enough - but then I don't do the CT calculations, that's what I pay them for!

[ASB]

Most effecient way (assuming not overseas) is to pay directly with company cheque or similar. It is then simply disallowed from the CT calculation and is therefore only effectively taxed at 19%.

If you pay it yourself and claim it then *I think* it simply become a taxable bik - even though it is excluded from the CT calculation. Not very tax efficient.

[malvolio]

Precisely, that's why I use a company debit card. Everything that most people out there treat as reclaimable expenses - food, travel (not petrol!), hotels, spare parts, new laptops, whatever are paid directly by MyCo. I raise about two expense forms a year, usually when I've manged to leave the card behind!

[minstrel]

If you pay it yourself and claim it then *I think* it simply become a taxable bik - even though it is excluded from the CT calculation. Not very tax efficient.

Precisely, that's why I use a company debit card. Everything that most people out there treat as reclaimable expenses - food, travel (not petrol!), hotels, spare parts, new laptops, whatever are paid directly by MyCo. I raise about two expense forms a year, usually when I've manged to leave the card behind!

Is that really true? Does it really make a difference whether the company pays for it or a director pays and then claims it back as a legitimate business expense incurred on behalf of the company?

Surely any benefit-in-kind tax relates to its value and whether it is a benefit or a legitimate company expense not who physically paid for it?

"What, that all-inclusive two week trip to the Caribbean my company gave me as a bonus for all my hard work? Of course that's not a BIK Hector. Look - I've even got the company debit card receipt to prove it!"

I agree paying expenses direct from the company account rather than via reclaimable expense is a cleaner way of doing things and would attract less attention as it wouldn't be on P11D etc, but when it comes to whether BIK tax is due does it matter which way it is done?

[oraclesmith]

No. It make no difference except....... if there is a non-zero balance on the Directors Loan Account at the end of the tax year. If this happens then either the Director has obtained a benefit (a loan) or the company has incurred a liability to a Director. Either way, there are tax implications.

PS. One of the slight problems with paying your own expenses and reclaiming them is that it might be possible for the HMRC to extend an investigation into the Director's personal bank or credit card account because that is where the transactions originated.