How can you prove that your using equipment 100% for business?

[SimonMac]

Starting up as a contractor, registered for VAT and awaiting the confirmation. I'd like to buy a new laptop and a few peripherals (external hard drive/printer etc) and want to be able to claim back the VAT. How would I go about proving that its gonna be for business use only?

[cojak]

Wait and buy it from your business bank account, you don't need to prove it then.

[Wanderer]

Starting up as a contractor, registered for VAT and awaiting the confirmation. I'd like to buy a new laptop and a few peripherals (external hard drive/printer etc) and want to be able to claim back the VAT. How would I go about proving that its gonna be for business use only?

Welcome!

The simple rule is that it must be "wholly and exclusively for business use". You only have to prove it if you ever get investigated and if HMRC ever decide to question it. I don't think there are any special steps to take to prove that it's a business computer. Having another computer at home for personal use would help your case, as would not having a load of games, porn and cooking recipes on your "work" computer.

The reality is that it's practically impossible to prove either way so they that are not likely to query it so don't sweat it, just get on with running your business. Buy it out of your own pocket and get them to make out the VAT receipt in your company name if you can. You can then claim it as "start up expenses". If you register for the Flat Rate Scheme then you can't claim it unless it's over 2,000 pounds so do all your start up purchases first then consider registering for the FRS.

It's things that have an obvious duality of purpose that might get questioned if you ever get investigated. A gaming PC and 7.1 surround sound system is going to be hard to justify if you are a helpdesk analyst but if you are a games developer then it's probably going to be allowable.

If you do a business trip then it would be worthwhile keeping notes of what the trip was for. If it's somewhere that's going to look controversial like the Costa Del Sol then make sure you have the documentary evidence to prove it was a business trip, not a holiday.

My view is that if you have a reasonably plausible justification and claim the expenses in good faith then if they investigate your expenses and if they disallow them, they will probably only make you pay back the tax you avoided without penalties. You could ask an accountant (you should get one straight away) and see what they say. Some are more conservative than others - I guess they get a bad name if HMRC find out they have been advising their clients to take the piss.

Wait and buy it from your business bank account, you don't need to prove it then.

So if I brought a new telly on my business account, does that automatically make it a legitimate business expense then? If not, what difference does it make which account you buy it out of?

[VectraMan]

WHS. I can point at all the plan B work, and some client work that I've done at home on my co's equipment, so I have pretty good justification for saying it's for business use, which it is. If you do all your work on site, with client supplied equipment, and are claiming a laptop for home because you do your accounts on it (as I'm sure many people do), and it's your only laptop/PC, then I think you're on more shakey ground. If anybody ever looks that is, which is unlikely.

"Wholly and exclusively for business use" is a bit ridiculous given that most office PCs get used for personal things to some extent (or CUK would be a lot quieter during the day).

[SueEllen]

"Wholly and exclusively for business use" is a bit ridiculous given that most office PCs get used for personal things to some extent (or CUK would be a lot quieter during the day).

A small amount of personal use is allowed on company owned items.

[Maslins]

Yeah as SueEllen says, whilst there is the "wholly and exclusively" rule, HMRC still do accept there will inevitably be some token personal use of most business assets (be it playing a game of solitaire on your laptop in your lunch break, or texting your partner to say you're working late). They call it "merely incidental" private usage.

...so yeah, you'll be fine, but as Wanderer says, if you get the expensive surround sound and top of the range graphics card, whilst your only work need for it is MS Office & Firefox, be prepared to have to justify the expensive unnecessary upgrades (as has been said, this is only in the unlikely event HMRC did look into it in any great detail).

[Robot]

Starting up as a contractor, registered for VAT and awaiting the confirmation. I'd like to buy a new laptop and a few peripherals (external hard drive/printer etc) and want to be able to claim back the VAT. How would I go about proving that its gonna be for business use only?

Buy a second lot of 'stuff' for personal use or if you've got old 'stuff' use that for personal use all the time.

RE VAT, have you registered for the VAT flat rate scheme ? If yes, you might not be able to claim back the VAT, speak to your accountant.

Robot

[Scrag Meister]

Buy a second lot of 'stuff' for personal use or if you've got old 'stuff' use that for personal use all the time.

RE VAT, have you registered for the VAT flat rate scheme ? If yes, you might not be able to claim back the VAT, speak to your accountant.

Robot

If the total cost on any 1 invoice is over £2k then it can be claimed back.

Try and get everything on 1 invoice. I nearly lost out when I bought 2 laptops, Dell sent me 2 invoices both for less than 2k and I was gonna mis out on the VAT, but asked them to amalgamate into 1, which they did, and I then could claim the Vat back even though on Flat rate scheme.

HM Revenue & Customs: Flat Rate Scheme for VAT

[escapeUK]

My question back is, "How can they prove you arent?"

Im sure the taxman isnt going to come over, fire your laptop up and start looking at your most recent documents, browsing history etc.

I think you just need to be sensible. As IT consultants I think any bit of IT expenditure should be covered.