Related part time degree course and allowed company expenses under HMRC rules

[LittleRedBaron]

I operate as an IT Project Manager - almost exclusively in the Finance sector. I have done some work in IT Security over recent years and want to move more into that specialism and market my company as a Cyber Security Project Management specialist.

I started a Cyber Security MSc in 2018 which my Ltd Co. paid for. My accountant called this out as being a benefit and stated that this would be disallowed under HMRC rules. Due to filing time constraints I agreed to have the cost moved to my Directors Loan account but I will have 2019 fees falling due soon and want to know if I can challenge this.

My argument is two fold:
1. The degree course is focussed on the work I do and will enable me to do it better.
2. The course is of benefit to the company in that it will (hopefully) allow me to increase revenue into the company.

Grateful for any advice and experience others may have had with a similar argument.

Many thanks
LittleRedBaron

[Lance]

Your accountant is right.
This is identical to an example that HMRC to show a benefit.

[MrButton]

Yeah I think it’s a clear case based on HMRC guidance I read a while ago.

However I seem to come across contractors all the time who are doing degrees/masters paid by their LTD and their accountant have given their thumbs up.

[Lance]

their accountant have given their thumbs up.

more likely the accountants have warned them of the risk, they argue, the accountant says 'suit yourself it's your risk' and that is interpreted as a thumbs up....

[MrButton]

more likely the accountants have warned them of the risk, they argue, the accountant says 'suit yourself it's your risk' and that is interpreted as a thumbs up....

Ha. Probs.

[northernladuk]

want to move more into that specialism

I'd say if you need to do the course to do this then it's not allowable. New skill.

How much are the fees by the way?

[Alchemy Accountancy]

Is the course to update or enhance an existing skill? If so, it can be deducted as a trading expense of the business.

[northernladuk]

Is the course to update or enhance an existing skill? If so, it can be deducted as a trading expense of the business.

He's a Project Manager. He needs to do a Cyber Security course to become a Cyber Security Project Manager.

Seems fairly black and white for that. He has skills, his PM skills. Cyber Security is learning new knowledge to apply his existing skills so he can work in something he can't work in currently.

Let's have a definitive decision, not a quote from the manual

[Craig@Clarity]

If we look at training, a course can be claimed as an expense (revenue cost = a usual cost that is deducted from turnover on your profit and loss) if it relevant to the work they do to generate income for their company. It should enhance or reinforce their existing skill sets, competency or proficiency for the benefit of the company and it is incurred wholly and exclusively for the purpose of the trade carried on by the individual at the time the training is undertaken.

If Cyber Security is a completely new skill and a new qualification (MSc) is obtained from that expense, it's likely that that expenditure will not satisfy the 'wholly and exclusively for the purpose of the existing trade'. Seems to me like it is and would therefore not count as an expense (revenue cost).

However, in the case of Dass v Special Commissioner and others [2006] EWHC2491 (Ch), it's more than likely that the company can pay for the fees but it could be classed as capital expenditure and not allowable as a deduction for corporation tax.

[LittleRedBaron]

Thank you!

Many thanks for the excellent advice. Seems I have to bite the bullet and pay for it myself