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Leeway with 'wholly and exclusively for business use' regarding furniture?

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    #11
    Originally posted by d000hg View Post

    That's an interesting distinction. Essentially there's a difference between the motivation to buy W&E, versus what you do once you have it? You cannot do your work without X so the company buys it, but you can then use X for non-work purposes? Or is that an oversimplification?
    That's *exactly* what it means. It's also why the proportion of business vs personal use is also not a determining factor - in fact HMRC have an example on their handbook that shows that a laptop can meet the "wholly and exclusively" rule even where its used for personal reasons more than 50% of the time.

    The HMRC guidance is here:
    https://www.gov.uk/hmrc-internal-man...anual/eim21613

    In particular:

    The “not significant” condition should not be decided purely on the absolute time spent on different uses of the equipment or services provided. It should be considered in the context of the employee’s duties and the necessity for the employee to have the equipment or services provided in order to carry out the duties of the employment.
    These rules apply to any assets or services provided to any employee at home.

    However, you also need to be pragmatic - a good rule of thumb is: if you had an inspection, could you convince the tax inspector that a) it was something that was essential for your business and b) that there was no dual *purpose* for buying it. The more likely something has a dual purpose, the more convincing your case will need to be. Something that is clearly work/office equipment will probably not be questioned.

    For example...you could probably contrive a business case for buying a TV for your home office but if the office is in your home and you don't have a really convincing reason for buying it then HMIT will probably think you're pulling a fast one. But if you were a console games developer that needs a console and a TV to hook it up to then clearly it would pass the wholly and exclusively rule, even if you did use it recreationally outside office hours.
    Last edited by TheCyclingProgrammer; 6 October 2021, 11:54.

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      #12
      Originally posted by jamesbrown View Post

      It's more like motivation is emphasized in case law when attempting to interpret the facts of what actually happened, in practice. The first thing is that it must be capable of being wholly and exclusively for business use. A kitchen table isn't going to pass that test because it has an intrinsic non-trade purpose. The second thing is that it must also be supported by the facts, which is where the interpretation and case law arises.

      The main problem areas involve food and drink, entertainment and travel for conferences combined with a holiday, things like that where a dual purpose is possible, even likely. There are some case law precedents that are quite surprising, though, like a barrister (or some such, I forget) purchasing black robes that were necessary for their work, but it subsequently being established that there was a dual purpose of preserving "comfort and decency". However, in most cases, when the motivation was wholly and exclusively for the trade, then some incidental personal use will not undermine that. If motivation were not emphasized, then incidental personal use would fail the strict interpretation of ITTOIA. It would also be hard to distinguish between an incidental benefit that was not sought (allowable) and a secondary non-trade motive. The BIM is pretty decent on this stuff:

      https://www.gov.uk/hmrc-internal-man...anual/bim37400
      Worth remembering that you are talking about the general principle of "wholly and exclusively" but there are specific rules relating to the provision of equipment and services in an employee's home and those are the rules where the element of "no significant personal use" apply.

      This is important because most assets and services a business can buy for its employees are capable of being a *business* expense - the more important question is whether or not those expenses are a taxable benefit in kind.

      For example, a business could choose to buy all of its employees a games console - this would be a taxable benefit in kind for the employees but it would still be a tax-deductible expense for the business because the provision of benefits to employees is generally tax-deductible.

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        #13
        Originally posted by northernladuk View Post
        I think you are making it more complicated by focussing on the non work purpose. For business use with occassional personal use and you might have a case. Focussing so much on the personal use looks like you are trying to manipulate the rules.
        But it doesn't really matter if it 'looks' that way on a surface level does it?

        Let's say I develop video games for platforms like iPad and Steam and Xbox market-place. I absolutely need to make sure I have an XBox (maybe more than one), a 4K TV, maybe even dedicated gaming rig(s) for development and testing.
        I also absolutely am going to use that kit for gaming in my spare time, maybe a lot of hours, and let my kids play on it, etc.
        That can LOOK a bit smelly if HMRC sees the receipts but the motivation to BUY is 100% business-related. There is no intent to stretch the rules. It would be foolish to buy a separate XBox for personal use.

        edit: just saw TheCyclingProgrammer mentioned this case already. But it's a field I used to work in
        Originally posted by MaryPoppins
        I'd still not breastfeed a nazi
        Originally posted by vetran
        Urine is quite nourishing

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          #14
          Originally posted by d000hg View Post
          But it doesn't really matter if it 'looks' that way on a surface level does it?
          No not really to be fair. I'm meant how the discussion looks not the actual claim/item. You know, when we get people that try justify a vacuum cleaner. They are just letting the tax tail wag the business dog with the aim of taking the piss.
          Let's say I develop video games for platforms like iPad and Steam and Xbox market-place. I absolutely need to make sure I have an XBox (maybe more than one), a 4K TV, maybe even dedicated gaming rig(s) for development and testing.
          I also absolutely am going to use that kit for gaming in my spare time, maybe a lot of hours, and let my kids play on it, etc.
          That can LOOK a bit smelly if HMRC sees the receipts but the motivation to BUY is 100% business-related. There is no intent to stretch the rules. It would be foolish to buy a separate XBox for personal use.

          edit: just saw TheCyclingProgrammer mentioned this case already. But it's a field I used to work in
          Absolutely. At the end of the day you are going to have to get investigated for this to become a problem so if you are running a fairly tight ship then this is very unlikely to happen. Once they've taken an interest a chat with your accountant and they'll send some numbers over which will close most investigations. Even at this point stating you have an Xbox because you are games developer will probably sate them.

          It's only if they come in and go through you with a big rod and a bucket of lube do you really have to justify it, and if they don't agree then you pay a the tax and possibly a fine.

          For your example which is, at very worst, a bit grey, as long as you are running the rest of your finances well then I'd say you are good to go. Questioning individual items like this is totally the way to but if you are doing things totally properly otherwise you are OK. Which ever way you go it's most certainly not taking the piss like some people do and it's them that need to worry, not you.
          Last edited by northernladuk; 7 October 2021, 13:50.
          'CUK forum personality of 2011 - Winner - Yes really!!!!

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            #15
            A fun one would be if you run whisky tastings or similar as a 1-man business.
            Originally posted by MaryPoppins
            I'd still not breastfeed a nazi
            Originally posted by vetran
            Urine is quite nourishing

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              #16
              Originally posted by d000hg View Post
              A fun one would be if you run whisky tastings or similar as a 1-man business.
              Ooh. I forgot I also ran a gin education society.

              Comment


                #17
                Originally posted by jamesbrown View Post
                Purchasing an office desk and claiming as a business expense is fine. Wholly and exclusively in case law emphasises the motive more than the outcome and incidental personal use is fine in that context. By way of contrast, purchasing a kitchen table at which you do some office work would clearly not be fine because there would be a dual motive. There’s a lot of common sense in these rules. If your intention is to circumvent them, it’s almost certainly disallowable, but incidental personal use is generally fine.
                The major exception to this being office suits - things you wouldn't be seen dead in otherwise, but not allowed as an expense. Despite many years buying suits and shirts wholly and specifically for this purpose.
                ⭐️ Gold Star Contractor

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                  #18
                  Originally posted by PerfectStorm View Post

                  The major exception to this being office suits - things you wouldn't be seen dead in otherwise, but not allowed as an expense. Despite many years buying suits and shirts wholly and specifically for this purpose.
                  I don't see it's an exception at all, a suit is clothing. We need clothing even if it is of a less general use like a suit. You personally buy them wholly and exclusively but they are not. It's a dress code, not a requirement as would be required by legislation. It's like someone saying they buy Mont Blanc pens just for signing business docs so its wholly and exclusive for work, but it's a pen so it's not.
                  'CUK forum personality of 2011 - Winner - Yes really!!!!

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                    #19
                    Originally posted by PerfectStorm View Post

                    The major exception to this being office suits - things you wouldn't be seen dead in otherwise, but not allowed as an expense. Despite many years buying suits and shirts wholly and specifically for this purpose.
                    Clothing is a classic example of something that has inherent duality of purpose but even within this there are a limited number of exemptions such as uniform, specialist clothing (e.g. safety clothing), costumes (think actors) and I think famously, barristers gowns and wig.

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                      #20
                      Originally posted by PerfectStorm View Post

                      The major exception to this being office suits - things you wouldn't be seen dead in otherwise, but not allowed as an expense. Despite many years buying suits and shirts wholly and specifically for this purpose.
                      Actually, that is a classic example of the opposite, the famous case being a barrister (I think, or similar) whose black attire was deemed to have the secondary purpose of "preserving comfort and decency".

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