Can you claim PCG sub as IR35 expense?

[malvolio]

That's it precisely.

Can't quote the threads, most of them are at L80 so you can't reach them (I assume...?) but I wanted the informed inside view as opoposed to opinion. One summary is at http://www.pcg.org.uk/info/ubbthread...rue#Post785675

The search engine is a lot better than it was with the new forum software, might be worth a go

[THEPUMA]

Yes access denied. I'm pretty sure it's wrong though.

[ittony]

That's it precisely.

Can't quote the threads, most of them are at L80 so you can't reach them (I assume...?) but I wanted the informed inside view as opoposed to opinion. One summary is at http://www.pcg.org.uk/info/ubbthread...rue#Post785675

The search engine is a lot better than it was with the new forum software, might be worth a go

Thanks Malvolio, the official line from the PCG directors seems pretty unambiguous now at least, i.e. "You can pay for it out of your business account, but you just can't claim against CT". I can live with that.

I must say though, it doesn't inspire me with confidence in the free legal and accountancy hot-lines that members supposedly have access to, that the answer was such a long time coming.

[malvolio]

Yes access denied. I'm pretty sure it's wrong though.

I'm not about to plough through all that material again. It was, however, based on expert opinion so I'm inclined to accept the conclusion.

It's not about BIK per se. The PCG is not on the list of Professional Bodies whose members can claim subs as corporate expenses, because to do so would require them to release their full membership database to HMRC: for some reason the membership aren't all that keen on allowing that to happen (there's also an impact on PCG's own CT position, but we'll let that slide.)

However, the PCG membership is primarily an insurance cost that you wouldn't need if you weren't trading as a freelance, hence it is a legitimate business expense and can be reclaimed personally. That, apparently, is a separate argument to the one above re CT.

If you want better detail and supporting evidence, you will need to talk to one of the PCG's directors I'm afraid...

[THEPUMA]

I'm not about to plough through all that material again. It was, however, based on expert opinion so I'm inclined to accept the conclusion.

It's not about BIK per se. The PCG is not on the list of Professional Bodies whose members can claim subs as corporate expenses, because to do so would require them to release their full membership database to HMRC: for some reason the membership aren't all that keen on allowing that to happen (there's also an impact on PCG's own CT position, but we'll let that slide.)

However, the PCG membership is primarily an insurance cost that you wouldn't need if you weren't trading as a freelance, hence it is a legitimate business expense and can be reclaimed personally. That, apparently, is a separate argument to the one above re CT.

If you want better detail and supporting evidence, you will need to talk to one of the PCG's directors I'm afraid...

I think we'll have to agree to disagree. Incidentally, tax investigation insurance is not allowable either so that line of argument doesn't work.

Interestingly, most purveyors of tax investigation insurance argue that it is allowable for obvious reasons. Playing devil's advocate, it could be argued that the PCG is doing likewise.

[EvilWeevil]

(there's also an impact on PCG's own CT position, but we'll let that slide.)

So the choice comes down to the PCG paying CT, or me paying it? I know which I prefer.

[ittony]

I think we'll have to agree to disagree. Incidentally, tax investigation insurance is not allowable either so that line of argument doesn't work.

Interestingly, most purveyors of tax investigation insurance argue that it is allowable for obvious reasons. Playing devil's advocate, it could be argued that the PCG is doing likewise.

Allowable for what?

[THEPUMA]

Allowable for what?

Good point. I meant corporation tax whereas Malvolio appears to have been talking about an expense claim.

It is definitely not allowable as an expense claim as you couldn't possibly argue that it was wholly, exclusively and NECESSARILY incurred for the purposes of the trade.

The key question is really whether it is a benefit-in-kind if it is paid by the company. I believe it is given that it isn't on List 3.

Whether or not it is corporation tax deductible, would depend upon whether or not it is taxable in the hands of the employee I believe. As it is (in my opinion), it should be corporation tax-deductible.

Please note this logic doesn't work in reverse. ie if it is disallowed for corporation tax purposes then it isn't a BIK.

[ittony]

Good point. I meant corporation tax whereas Malvolio appears to have been talking about an expense claim.

It is definitely not allowable as an expense claim as you couldn't possibly argue that it was wholly, exclusively and NECESSARILY incurred for the purposes of the trade.

The key question is really whether it is a benefit-in-kind if it is paid by the company. I believe it is given that it isn't on List 3.

Eh? That's a bit of a strange way of approaching it. If it's not a benefit-in-kind then surely it must be allowable as an expense claim. Surely allowable-as-expense-claim and is-benefit-in-kind are mutually exclusive?

Whether or not it is corporation tax deductible, would depend upon whether or not it is taxable in the hands of the employee I believe. As it is (in my opinion), it should be corporation tax-deductible.

Please note this logic doesn't work in reverse. ie if it is disallowed for corporation tax purposes then it isn't a BIK.

You seem to have arrived at the diagonally opposite conclusion to the official PCG line, i.e. they say it's not allowable against corporation tax but it is allowable as an expense claim (i.e. not a benefit in kind if paid by the company), but you say it is allowable against corporation tax but not as an expense claim.

What it it with accountants and getting a straight answer?

[malvolio]

I think Mr Puma and I are agreeing to disagree (although I'm right, of course ) but to reiterate the PCG line:

It's not allowable against CT because PCG has already paid the CT on the membership income and you can't do it twice (the PCG is a company limited by guarantee, remeber and all members own it equally). YourCo can pay for it and no BIK hence no need to put it on the P11D, or you can pay for it yourself and reclaim it from YourCo.