Reply to: Expenses incurred beofre company formation

[Ardesco]

Check out the 2 year rule Denny, you can claim a load of expenses made in the 2 years before your company was formed if you can prove they were a result of setting up the business. Of course this doesn't inclue sitting in the Dog and Duck, buying lots of food and beer and saying "I think I should start my own business"

HTH

[Denny]

Recently and whilst still in the land of being a permy, I spent money on some training materials and exams to reinforce my CV prior to making the plunge into contracting. Now that I'm up and running is it too late to count this as a business expense? It was genuinely and solely incurred to facilitate the rise into contractorhood, and was unrelated to my previous role.

TIA!

Yes it is too late. Your business has to be registered before you can claim for deductable allowances. There also needs to be some discernable link between your expenditure and improving your profitability and must not be used only for personal gain. If the business is not up and running then you can't make your case, can you. You are no different than anyone else between permie jobs who wants to better themselves.

[MarillionFan]

I did a course ten years ago before I was a contractor. I still have the receipt. Can I claim??? Oh plus, the meal I had that day??

[Yatesy]

Cheers for clarifying that, yes I do have an accountant! Will check with him tomorrow!

[malvolio]

It's not, and no different to buying a PC, some software, a factory to work out of, a telephone to talk to people...

There is no absolute rule that says you have to have the company first, or none of us would ever have started anything. As long as it's demonstrably part of the business setup you can back claim it for quite a long time. Ask your accountant to dig out the actual details (ermm, you do have an accountant, I take it?).

[VectraMan]

I bought a laptop whilst still working for an umbrella with the intention of using it to work on my plan B whilst staying away (not that I did). Then when I created my Ltd. a month or so later, I claimed back the cost as an expense and claimed back the VAT too (and did actually use it for demonstrations to a client).

Of course I could end up in jail yet, but the accoutant said it was okay.

I can't see why training would be different.

[Pondlife]

Malvolio, I don't have a problem with the concept of what can be claimed or can't, if you spend money solely for your business and can support it then the expense is claimable, without BIK thats fine. My questions was whether an expense claimed prior to company formation is submittable or is it just tough luck then?

If it a legit bus expense incurred prior to formation then it is expensable (sp?) There is a time limit but it's pretty big (2 years IIRC?)

IANAA etc.

[Yatesy]

Malvolio, I don't have a problem with the concept of what can be claimed or can't, if you spend money solely for your business and can support it then the expense is claimable, without BIK thats fine. My questions was whether an expense claimed prior to company formation is submittable or is it just tough luck then?

[DaveB]

There is a discussion on this matter over on S99

http://www.shout99.com/contractors/s...le.pl?id=40165

You have to be able to prove that the training was wholly required for your current business and not purely to gain future business.

Although I don't agree with the advice.

Yes, I see what you mean. Is it the company benefitting from it or you personally? Is it something you need in order to perform your current duties as an employee or not? If Hector decides it's personal benefit or not related to your current duties then it goes on your P11D and get taxed.

I'm not sure I agree with the advice, to try it on and see what happens, either. Too much chance of it raising eyebrows and leading to a fuller investigation I would have thought.

[malvolio]

And as I've said before, you can claim as much as you like on anything you like. However, if it's not business related, you treat it as personal income and pay tax accordingly.


Training costs inside IR35 are one of the real irritations. Basically, the 5% is meant to cover it (yeah, right), you can't offset it against your deemed salary.

[Pondlife]

I was under the impresion, from a number of discussions here a while back, that training was not claimable as a business expense or against VAT. I'm not an accountant though. Can anyone give us a definitive answer?

There is a discussion on this matter over on S99

http://www.shout99.com/contractors/s...le.pl?id=40165

You have to be able to prove that the training was wholly required for your current business and not purely to gain future business.

Although I don't agree with the advice.

[Yatesy]

From my understaning (and that ain't definitive by any means) it depends on IR35 status.

[DaveB]

I was under the impresion, from a number of discussions here a while back, that training was not claimable as a business expense or against VAT. I'm not an accountant though. Can anyone give us a definitive answer?

[Yatesy]

Thanks SP, I'll have a chat to my accountant about it. It's not the end of the world if I can't claim it, but I paid it out of my own pocket so it would be nice to get the relief on it!

[Sockpuppet]

I did a thead on this a while back, search for threads started by me and you'll find it.

My accountants advice was I could could my PRINCE2 training as a business expense but I should put it through in my second VAT return so its looks less usspect.