Reply to: Buying a new Laptop as business expense

[northernladuk]

You've got to buy it at market rate obviously. Get your accountant set up and then ask them all these questions.

You could also try the search method I mention in your other thread.

[easybenjamins]

just to add a couple more related questions

Purchased a laptop personally, a couple of months ago (say 1500). Working on setting up the Ltd this week. Can I sell the laptop to the company, together with some accessories I've purchased from another supplier (say 300), for a total of 1800 ? Or should I apply some loss of value for the 3 months (say minus 10% based on a 3 year cycle for computers), is there a rule for this ?

What happens later, when the laptop dies or is too old to be used ? do I have to keep it around, for how long? just in case they check my books and all in a few years, to prove the asset is real ?

Last one: as an IT contractor, different clients I will work with at the same time, require working on a separate laptop (as they need to install specific security software for remote access). Can I get additional equipment covered under expenses ? of course I would make sure the wording in the contract is clear on the requirement for a dedicated asset.


Please let me know if I should post these as a separate thread, just thought it's more helpful if the discussion continues here, since the original question was already answered in great detail.

[TheCyclingProgrammer]

So all those hotels that I've paid for personally and claimed back through the business aren't VAT deductible?

As a general rule, you can only reclaim VAT on a purchase made in the name of the VAT registered entity. This includes an employee purchasing something on behalf of their employer if they get a valid VAT receipt or invoice in the company name or for certain small items where the intent was clearly to purchase a supply on the company's behalf:

https://www.gov.uk/hmrc-internal-man...t-tax/vit13300
https://www.gov.uk/hmrc-internal-man...t-tax/vit13400

There are some exceptions for certain types of expenses - some are listed in the link above. Travel, subsistence and accommodation are also exceptions to the rule:

https://www.gov.uk/reclaim-vat/staff-travel

If you're purchasing any significant piece of equipment (whether it's a capital asset or revenue expense) - i.e. anything other than small sundries - then you should get a valid VAT invoice in the company name.

I'm fairly sure as a result, if you purchase an asset personally, then transfer this asset to the company (or sell it to the company) then there's no VAT to recover as there is no VAT on the sale between you and YourCo, only on the original supply which YourCo was not party to.

[MrButton]

So all those hotels that I've paid for personally and claimed back through the business aren't VAT deductible?

There are some wires crossed I think - you can indeed claim the VAT back if purchased on behalf of the company.....

TheCyclingProgrammer was replying to the message which stated buying it as a personal asset then "transfer" the asset to the company. In this case you wouldn't be able to claim the VAT.

This is my understanding.

[FrontEnder]

You won't be able to recover the VAT if you do that as OP is not personally VAT registered. OP could *pay* for it personally and recover the money from the business (i.e. treat it like a loan) but you'd still need to make it clear that the purchase is on behalf of the company and get a valid VAT invoice in the company name so it doesn't really gain you anything. Much simpler to just buy it through the business in the first place.

So all those hotels that I've paid for personally and claimed back through the business aren't VAT deductible?

[Hobosapien]

You won't be able to recover the VAT if you do that as OP is not personally VAT registered. OP could *pay* for it personally and recover the money from the business (i.e. treat it like a loan) but you'd still need to make it clear that the purchase is on behalf of the company and get a valid VAT invoice in the company name so it doesn't really gain you anything. Much simpler to just buy it through the business in the first place.

Not done it for years (while on flat rate VAT scheme) so rules may have changed or has become under more scrutiny from VAT man, but I've put through loads of expenses to recover personal cost where I've paid cash or with personal card and my Ltd reimbursed me and reclaimed the VAT where possible. This included VAT registered hotel stays while working away during the week, which sometimes made a hotel better or similar value to the grotty b&b down the road.

My accountant was happy with the records I kept and never pulled me up on it so it must have been legit.

I think as long as you can prove appropriate intent (i.e. business related) during any investigation (that may or may not happen) all will be well, one would hope.

[northernladuk]

During my IR35 investigation they asked that very question. Maybe they were stuck in the dark ages when books were all done by hand

I am sure they did. Having your own kit can influence your IR35 status but the OP is talking accounting wise. Two very different things.

[Batcher]

And no you won't have a problem as an IT contractor explaining to HMRC why you need a laptop.

During my IR35 investigation they asked that very question. Maybe they were stuck in the dark ages when books were all done by hand

[Lance]

If you don't want the hassle of setting up a business account with the laptop supplier blah blah blah

then use the company debit card......

[TheCyclingProgrammer]

If you don't want the hassle of setting up a business account with the laptop supplier you can purchase privately and transfer to the Ltd claiming the amount as an expense.

You won't be able to recover the VAT if you do that as OP is not personally VAT registered. OP could *pay* for it personally and recover the money from the business (i.e. treat it like a loan) but you'd still need to make it clear that the purchase is on behalf of the company and get a valid VAT invoice in the company name so it doesn't really gain you anything. Much simpler to just buy it through the business in the first place.

[Hobosapien]

If you don't want the hassle of setting up a business account with the laptop supplier you can purchase privately and transfer to the Ltd claiming the amount as an expense.

If need to worry about the £2k threshold for flat rate VAT reclaiming, consider purchasing additional items at same time if you don't need or want a laptop costing that amount. There's almost an endless number of add-ons some companies will offer when purchasing a laptop, some you might actually need. Laptop bag, docking station, separate mouse, additional monitor, .... easy to spend £2k if need more than just the laptop itself.

[Scruff]

As long as you are running a Limited Company, and you purchase the Laptop through the Limited Company, and the invoice is in the name of the Limited Company, there will be no issue. If you are on the Flat Rate VAT Scheme, in order to claim the VAT back, the Laptop needs to have an invoiced value of at least £2000, over and above the first sentence.

[TheCyclingProgrammer]

You're an IT contractor. You might not need a laptop for this contract but you may well do for another, plus for using at home on side projects to help you keep up your skills. Can't ever imagine a tax inspector questioning a claim for a laptop for a software developer (or anyone in IT really). Stop overthinking it.

[northernladuk]

Do you have an accountant?

https://www.google.co.uk/search?q=la...obile&ie=UTF-8

And no you won't have a problem as an IT contractor explaining to HMRC why you need a laptop.

[GhostofTarbera]

Your client has nothing to do with what you buy a laptop for. Not sure why you even mention your client in this context

You are an IT contractor, a laptop is a requirement for your own business - end of.

Anyhoo

If going high spec push it over the £2K and reclaim the VAT if on flat rate scheme