Expensing and iPod..

[Maxamus]

I know someone who put their Plasma Screen TV through their company. And that was in the days that they cost 6 grand

did he get away with it?

[freakydancer]

blah

[Gonzo]

did he get away with it?

Yes he did.

His justification was that "he is a big bloke so needs a big screen for giving presentations". The fact that it never moved from his sitting room wall because it took six people to lift it did not seem to matter.

However, I don't know what the outcome of his IR35 dispute was so it could all have been academic.

[css_jay99]

I could do with a bigger Ipod and the New Nokia N95 !

But really I dont see what the benefits are doing such a thing (i.e buying Fixed assets) on a flatRate VAT scheme. correct me if i am wrong but

1) capital expenditures do not reduce your corp tax, except for a little depreciation ?
2) you will only be saving on tax on dividend had you had taken the money out in the first place to buy the fixed asset. But then again the FA is not yours but you company's.

So whats the point, its all a false Economy any way. I would like to buy a bigger 80Gb IPOD and a NOkia N95 (business use off course ) but figures dont look any better buying as a Ltd co. expenditure.

css_jay99

[ASB]

I could do with a bigger Ipod and the New Nokia N95 !

But really I dont see what the benefits are doing such a thing (i.e buying Fixed assets) on a flatRate VAT scheme. correct me if i am wrong but

1) capital expenditures do not reduce your corp tax, except for a little depreciation ?
2) you will only be saving on tax on dividend had you had taken the money out in the first place to buy the fixed asset. But then again the FA is not yours but you company's.

So whats the point, its all a false Economy any way. I would like to buy a bigger 80Gb IPOD and a NOkia N95 (business use off course ) but figures dont look any better buying as a Ltd co. expenditure.

css_jay99

sometimes it can work, sometimes not. Basically you get capital allowances at the usual rate for the asset class in question which reduces the CT liablility, then there is generally a balancing charge/allowance at the assets actual disposal. This being the difference between its book value and the actual price realised.

If you then have personal use this is taxable as a BIK, normally at 10% of the book value. So, this can potentially be a good way of funding rapidly decreasing assets. e.g.

Company buys lawn tractor for 5k. In 2 years it sells it to director for 2k (fair market value). Company saves 600 quid corp tax. Director pay BIK tax on approx 800 quid (160/320).

Essentially therefore the initial depreciation has been paid for out of pretax rather than post tax income. I think now this is something that the HMRC have clamped down somewhat over the last few years so there may be very few things it has any chance of working with. Garden machinery was one.

As ever check current position with accountants.