Reply to: Limited Trade Test Relevant Goods

[Lance]

The profit you can make on the FRS is often overstated anyway. You need to deduct the cost of any input VAT you’ve incurred that you would have reclaimed on the standard scheme (this is what the FRS surplus is designed to cover) to determine the true profitability and if you’re bumping up your expenses to qualify you’re likely reducing any profit you’d make on the scheme (not to mention your profitability in general by incurring extra costs).

Just stick with the standard VAT scheme. It’s not that difficult.

The most I ever made was £2k. Which is not to be sniffed at. But if staying in hotels much it soon disappears.
I also drive rather than the train so can get VAT back on mileage.
I’d probably still be on FRS under the old rules, but it is pretty marginal as you say.

[TheCyclingProgrammer]

The profit you can make on the FRS is often overstated anyway. You need to deduct the cost of any input VAT you’ve incurred that you would have reclaimed on the standard scheme (this is what the FRS surplus is designed to cover) to determine the true profitability and if you’re bumping up your expenses to qualify you’re likely reducing any profit you’d make on the scheme (not to mention your profitability in general by incurring extra costs).

Just stick with the standard VAT scheme. It’s not that difficult.

[SueEllen]

Suitcase?? Really?

I haven't looked for suitcases with laptop compartments, but I've seen and actually know people who put their laptop in cabin size suitcases with other work papers.

I have a large rucksack with a laptop compartment which I put through my company. I got it when I was doing a lot of UK business travel. I have no need to use it otherwise.

[Lance]

If you can demonstrate that it is only used for work, yes. I found this on a questions for accountants website.



Business expenses - inniAccounts

Anything bought that you use excusively for work can legally be offset as a business expense, there are no limitations. However if you overdo it HMRC will simply demand proof that it isn't used for leisure and reject it.

if your suitcase is a laptop bag, and the laptop is a company asset then it's clear cut.
I bought both for my last round of trips, the laptop bag was paid by the company and I paid for the suitcase.

[BlasterBates]

Suitcase?? Really?

If you can demonstrate that it is only used for work, yes. I found this on a questions for accountants website.

All expenses, to be allowable, must be necessary and incurred wholly and exclusively for the purposes of your business. Therefore if you would also use the bag for personal travel then it wouldn’t be an allowable expense.

Business expenses - inniAccounts

Anything bought that you use excusively for work can legally be offset as a business expense, there are no limitations. However if you overdo it HMRC will simply demand proof that it isn't used for leisure and reject it.

[ladymuck]

stationery



To be clear...... Claiming stationery as a business expense is fine.
BUT..... as mentioned earlier in the thread it will only help you go over the 2% threshold that will allow you to cease being a limited cost trader, if it's 100% for business use only.

So if your ridiculously expensive stationery is business only then you can do it. But you will need to do it every year. At some point you need to consider if this is good business. I reckon you'll end up with a sh*t load of unused stationery, and the tiny profit you would have made on the FRS scheme has been swallowed up on those extra costs.
And any VAT on on accountancy, hotels, mileage and other expenses will not be reclaimable.

In short. Forget it.

There's actually a provision in the rules that excludes the buying up of items just to reach the required threshold, IIRC.

[Old Greg]

You can justify a desk or chair and probably a lamp too for the desk.

Can my company pay for home office fittings?





I doubt HMRC would quibble over a suitcase though you could argue that it could be used for leisure.

You can claim additional costs such as individual business calls, and additional charges for heating and lighting.

Suitcase?? Really?

[Lance]

Oh.. does it mean if the cost is over 2% but I am a service company that would attract look into why I am not a limited company? Just planing to get some quality stationary, which might cost 3% of revenue.. thanks.. I guess good stationary is still stationary not asset...

stationery



To be clear...... Claiming stationery as a business expense is fine.
BUT..... as mentioned earlier in the thread it will only help you go over the 2% threshold that will allow you to cease being a limited cost trader, if it's 100% for business use only.

So if your ridiculously expensive stationery is business only then you can do it. But you will need to do it every year. At some point you need to consider if this is good business. I reckon you'll end up with a sh*t load of unused stationery, and the tiny profit you would have made on the FRS scheme has been swallowed up on those extra costs.
And any VAT on on accountancy, hotels, mileage and other expenses will not be reclaimable.

In short. Forget it.

[Orangecat]

You can justify a desk or chair and probably a lamp too for the desk.

Can my company pay for home office fittings?





I doubt HMRC would quibble over a suitcase though you could argue that it could be used for leisure.

You can claim additional costs such as individual business calls, and additional charges for heating and lighting.

Thanks that’s clear!

[Orangecat]

If what you’re really trying to ask is: can a service based contractor business avoid the limited cost trader rules, then the answer is almost certainly no.

Most of our costs are services (eg accountancy) or capital assets (equipment, office furniture) and any expenditure on goods are likely to be small sundry items that are likely to be a tiny proportion of your revenue.

For this reason there’s very little benefit to being on the flat rate scheme these days.

Oh.. does it mean if the cost is over 2% but I am a service company that would attract look into why I am not a limited company? Just planing to get some quality stationary, which might cost 3% of revenue.. thanks.. I guess good stationary is still stationary not asset...

[TheCyclingProgrammer]

If what you’re really trying to ask is: can a service based contractor business avoid the limited cost trader rules, then the answer is almost certainly no.

Most of our costs are services (eg accountancy) or capital assets (equipment, office furniture) and any expenditure on goods are likely to be small sundry items that are likely to be a tiny proportion of your revenue.

For this reason there’s very little benefit to being on the flat rate scheme these days.

[BlasterBates]

You can justify a desk or chair and probably a lamp too for the desk.

Can my company pay for home office fittings?

Your office is a room in your residential property, previously used for personal use, then you are obliged to pay for these ‘decorative peripherals’ - and I would count blinds and curtains in this respect, as part and parcel of you running your own home. Similarly, light fittings are part of the basic structure of the room and are therefore deemed to be an improvement to the property and so would not receive tax relief.

Conversely, your desk and chair is wholly, exclusively and necessarily for you to perform your business activities – if you require an additional desk which is necessary for your role, then this of course, attracts tax relief via capital allowances as office equipment.

I doubt HMRC would quibble over a suitcase though you could argue that it could be used for leisure.

You can claim additional costs such as individual business calls, and additional charges for heating and lighting.

you will entitled to claim the extra costs of heating and lighting the work place as well as business calls/broadband costs on a just and reasonable basis.

[northernladuk]

If you are having to ask then I bet you know what the answer is.

Top sockie trolling though. Can mods do the needful.

[ladymuck]

Thanks it is more that I don't fully understand what included in stationery and other office supplies to be used exclusively for the business. It would be much appreciated if someone can give a few examples.

Thanks a lot

Stationery = pens, paper, envelopes, paperclips, batteries, etc.

If you've worked in an office before, have a think about what sort of things were supplied.

These would generally be consumables that are replenished on a periodic basis.

If you need a headset/microphone for work, that could count too.

There is no definitive list as every business has slightly different requirements. The key point is that the purchase is entirely for business use.

[Orangecat]

Thanks it is more that I don't fully understand what included in stationery and other office supplies to be used exclusively for the business. It would be much appreciated if someone can give a few examples.

Thanks a lot

Separately, another question: For the first VAT period, the pre-trading & pre incorporation cost, would that be counted for the first period VAT 2% test?

Thanks