Reply to: Opinions on using coffee shop as a casual workspace.

[Old Greg]

If you buy enough coffee you won't have to be a low cost trader and can make profit on flat rate VAT.

It would never get past HMRC. You need a third party coffee shop / office space broker (BrokerCo) that pays for the coffees and then invoices out the desk space to YourCo. It could be done via a prepayment card which YourCo buys from BrokerCo but which remains in BrokerCo's name. Luncheon Vouchers 2.0.

[WordIsBond]

How did none of us think of this workaround when they introduced the low cost trader rules?

Think what it could have done for your digestive system, too.

[WordIsBond]

Regarding commentary about the amounts being miniscule. I think it is a good practice to include even the simplest of business expenses. I say this because when I go shopping online for example and go click happy and add a bunch of items to my cart thinking.. Oh that's only £2 pounds and so forth. By the time I click checkout the overall cart value is quite high.

I agree and do the same, but this is no 'simplest of business expense.' It's the kind of thing that could convince HMRC that you are just taking the mick and make them decide to put you through the wringer to see what else you've been up to. And maybe even decide if you are pushing the limits on this you might be pushing the limits on IR35, too.

If someone has the power to make my life hell, I don't want to trigger them. I don't mind at all having them say, 'Man, this guy even expenses envelopes' -- envelopes hardly cost anything but they are legit business expenses. But I don't want them saying, 'This chancer tried to put his morning coffee down at his local Starbucks through his company. Where else is he cheating?'

It's a risk/reward question. I think the risk here is significant and the reward small. I wouldn't do it. Sounds like your risk tolerance is higher than mine.

[TheCyclingProgrammer]

If you buy enough coffee you won't have to be a low cost trader and can make profit on flat rate VAT.

How did none of us think of this workaround when they introduced the low cost trader rules?

[WordIsBond]

plus the VAT

If you buy enough coffee you won't have to be a low cost trader and can make profit on flat rate VAT.

[WordIsBond]

Sorry to be pedantic here...but what you actually need to do is divide it out by 1 minus the rate of tax (expressed as a decimal) - I'm sure there will be a proper mathematical term for this..

Yeah, you're right.

The proper term (non-mathematical) is 'lazy' (that's me, for not making sure I had it precisely right) and 'nerd' (both of us) and 'clueless but accurate accountant' (that's you, for focusing on the numbers and ignoring the huge issue that he's not going to be doing admin in a coffee shop 230 days a year ).

But anyway, thanks for correcting me, I deserved it for being both pedantic and wrong.

[TheCyclingProgrammer]

And if the coffee shop kicks you out after 1 hour when all you bought was a single coffee, while you're in the middle of an important conference call?
...or they refuse to serve you because you take up a table for 4 people for 6 hours when they are busy?

It depends on the shop but places like Starbucks are usually pretty chilled about people working in there. Pro-tip: get a bre coffee and you can get free refills!

[northernladuk]

And if the coffee shop kicks you out after 1 hour when all you bought was a single coffee, while you're in the middle of an important conference call?
...or they refuse to serve you because you take up a table for 4 people for 6 hours when they are busy?

Now we've had a good number of sensible answers to a fairly daft question is it time to move it to General?? Pretty please.

[northernladuk]

Wetherspoons. All day coffee/tea free refills.

That will impress the client......

[WTFH]

And if the coffee shop kicks you out after 1 hour when all you bought was a single coffee, while you're in the middle of an important conference call?
...or they refuse to serve you because you take up a table for 4 people for 6 hours when they are busy?

[Old Greg]

Find a coffee shop that will give you a receipt for hot desk space for a tenner and throw in a tenner's worth of drinks and food.

[pr1]

plus the VAT

[Alchemy Accountancy]

£10 / day = £2,300 / year

paying this out of pocket would cost 2300 x 1.2 x 1.325 = £3,657

which makes a saving of £1,357 / year

You should also have used 1.19, not 1.2. And you should have asked OP if he is higher rate or not, if not, you should have used 1.075 instead of 1.325.

So the 2300 is wrong, the 1.2 is wrong, and the 1.325 might be wrong. Other than that your figures are fine.

Sorry to be pedantic here...but what you actually need to do is divide it out by 1 minus the rate of tax (expressed as a decimal) - I'm sure there will be a proper mathematical term for this..

So to get the dividend declaration required to get an after tax amount of £2,300 (and assuming a higher rate payer @ 32.5%) it is:
2,300 / 0.675 = 3,407.40

Then to get the amount of income required prior to corporation tax (19% is indeed the right rate), it is then:
3,407.40 / 0.81 = 4,206.67

So the actual saving (assuming a higher rate tax payer) would be £1,906.67

[TheCyclingProgrammer]

Rent a cheap office space, get a Nespresso machine contract. Surely it looks more like a business space then?

Get a garden office, buy a Nespresso machine.

[Lance]

Rent a cheap office space, get a Nespresso machine contract. Surely it looks more like a business space then?

Wetherspoons. All day coffee/tea free refills.