Continuing to expense flat through company whilst not working

[lt1984]

Hello,

For the last year I have been working for a client in London. I have a permanent residence elsewhere, which I return to every weekend, but claim expenses through my Ltd Co to stay in London during the week. Initially I stayed in hotels, but since January have rented a London studio flat through the company since this seemed demonstrably cheaper. My accountant advised this should be acceptable as a business expense whilst at a temporary workplace (the tenancy agreement is in the company's name and I, of course, continue to spend weekends at home).

My contract has been extended to the end of March next year (that would make it 18 months in total, so shouldn't be a problem with the 24 month rule). My preference would be to keep the flat until this date. My concern, however, is that I am away on holiday for three weeks in November, and then again for at least a week or so over Christmas - during which I would be generating no income for my company, which would thus have no need for the flat for this time.

I'm wondering if HMRC would therefore take a dim view of me continuing to expense the flat over this time period? I don't see doing so would be providing me with any BIK (I wouldn't be staying there over the period), and it wouldn't be practical to move out beforehand and then take a three month let in the new year (short term lets are significantly more expensive, and I suspect the duplicate lettings agent fees would already wipe out any potential "saving").

Thought I'd canvas opinions as to whether I'm worrying unnecessarily or whether this could potentially cause difficulty should HMRC ever question this expense? Grateful for your thoughts...

[NotAllThere]

While it make business sense to rent a flat, and thus save money, it's irrelevant to the question of it being non-BIK.

If the expense is already a legitimate business expense, then you are worrying unnecessarily.

[lt1984]

While it make business sense to rent a flat, and thus save money, it's irrelevant to the question of it being non-BIK.

If the expense is already a legitimate business expense, then you are worrying unnecessarily.

Thanks. My concern was that it could be seen as a decision to suit personal convenience rather that one which makes business sense. I don't think this is the case, merely that HMRC could see it as such (I read mixed viewpoints on the sense in renting vs. hotel-ing to begin with!).

[nomadd]

My concern, however, is that I am away on holiday for three weeks in November, and then again for at least a week or so over Christmas - during which I would be generating no income for my company, which would thus have no need for the flat for this time.

I'm wondering if HMRC would therefore take a dim view of me continuing to expense the flat over this time period?

As long as you aren't holidaying in the flat - seriously - then there is no problem.

Likewise, your rental agreement may go beyond the end of your contract by a few weeks. Again, there is nothing you can do about that - accept perhaps ask the LL if you could terminate the rental contract early - and HMRC couldn't bother you over it. It's simply the way these things play out in the real world.