Originally posted by PerfectStorm
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Leeway with 'wholly and exclusively for business use' regarding furniture?
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Originally posted by jamesbrown View PostPurchasing 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.Leave a comment:
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Originally posted by d000hg View PostA fun one would be if you run whisky tastings or similar as a 1-man business.Leave a comment:
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A fun one would be if you run whisky tastings or similar as a 1-man business.Leave a comment:
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Originally posted by d000hg View PostBut 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
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.Leave a comment:
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Originally posted by northernladuk View PostI 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.
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 inLeave a comment:
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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
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.Leave a comment:
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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?
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.
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.Leave a comment:
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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?
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
Leave a comment:
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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?
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.Leave a comment:
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