Reply to: Expensive Coffee Machine as Expense

[northernladuk]

I could humbly recommend the Oude Joris Max 120 vehicle to maximise the VAT efficiencies.

Throughplacement?? Take my money!!!

[Old Greg]

I would have thought it would have been better through an offshore loan that then get's written off costing giving them full tax relief and zero cost. Something like the Cayman Isles branch of Brighthouse?

I could humbly recommend the Oude Joris Max 120 vehicle to maximise the VAT efficiencies.

[northernladuk]

It is more efficient to get your SIPP to purchase it via a holding company in the Dutch Antilles and then lease it to your company.

I would have thought it would have been better through an offshore loan that then get's written off costing giving them full tax relief and zero cost. Something like the Cayman Isles branch of Brighthouse?

[Old Greg]

You'd also have to apportion any VAT claim too.

The above would probably make the whole operation above board so long as HMIT accepts the business/private use split as realistic but you then have to ask yourself...what's the point?

With a correct understanding of the metabolic half life of caffeine, you can partially apportion your breakfast coffee to business.

[Old Greg]

Add as company asset, claim AIA on cost.

Flip side is benefit in kind at 20% of cost each year. Pay NIC on the 20% value. Then split benefit between business/private use and pay tax on the private use part.

No issues with this whatsoever.

It is more efficient to get your SIPP to purchase it via a holding company in the Dutch Antilles and then lease it to your company.

[TheCyclingProgrammer]

Add as company asset, claim AIA on cost.

Flip side is benefit in kind at 20% of cost each year. Pay NIC on the 20% value. Then split benefit between business/private use and pay tax on the private use part.

No issues with this whatsoever.

You'd also have to apportion any VAT claim too.

The above would probably make the whole operation above board so long as HMIT accepts the business/private use split as realistic but you then have to ask yourself...what's the point?

[craigy1874]

Add as company asset, claim AIA on cost.

Flip side is benefit in kind at 20% of cost each year. Pay NIC on the 20% value. Then split benefit between business/private use and pay tax on the private use part.

No issues with this whatsoever.

[northernladuk]

This!
I told my accountant I need a line of coke every morning otherwise I cant function as a PM. He agreed its wholly and exclusively for the business and so I can now expense any deals back to my ltd. Go for it.

Isn't getting a VAT receipt a bit tricky?

[MonkeysUncle]

As an IT contractor and software developer I need coffee to carry out my work. I cannot focus without caffeine and it is an essential thing for me to carry out the nature of my cognitive work.

This!
I told my accountant I need a line of coke every morning otherwise I cant function as a PM. He agreed its wholly and exclusively for the business and so I can now expense any deals back to my ltd. Go for it.

[cannon999]

Please do. Makes us honest folk look better in front of the taxman

[SimonMac]

Mods can this be moved to general? I’m sure the parody threads would be epic!

[TheCyclingProgrammer]

The wholly and exclusively rule isn’t the only thing to consider here.

By definition a company can buy something as a perk for its employees and that makes it wholly and exclusively for business purposes and allowable for a corporation tax deduction. It doesn’t have to be something they need to do their job.

The issue is whether or not it would be treated as a BIK which would result in a personal tax charge on OP.

IMO a small coffee machine kept in the home office and supply of coffee would not attract any attention at an inspection any more than buying a desk/chair/filing cabinet. A large expensive coffee machine kept in the kitchen would.

But nobody can say for certain. I think OP needs to think about this. I would take their accountants advice on this one.

[northernladuk]

I am confident that I should be able to expense this coffee machine and book it as a business asset

You shouldn't be

but my accountant told me that I can't

That's why

I am pretty sure he is wrong or at least I really don't see why I shouldn't. Am I missing something, because I couldn't find any guidance by HMRC which would explain why this is not acceptable?

You probably can't find any guidance because it's pretty daft question. They can't cover every conceivable eventuality. Thy hope when they put some guidleiness like this one..
BIM37007 - Business Income Manual - HMRC internal manual - GOV.UK

that people will read and understand terms such as

an expense has been incurred for a dual purpose. Such expenditure should be disallowed

That you'll apply it with some common sense.

You don't need a coffee machine to do your job so it's not allowable.

And even if it was Cojaks comment covers it.

Spending £1600 is just taking the piss.

EDIT : If you do get investigated and plan on opening you defense with

As an IT contractor and software developer I need coffee to carry out my work.

please record and post a link. Should be an interesting watch.

[greenlake]

Or are you developing AI code for a fancy remote coffeemaid?

[Old Greg]

So to be legit, OP could buy both, and have the Nespresso in his kitchen and the expensive one in his office. Take that pesky tax inspectors!

And a small herd of dairy cattle.