Reply to: Company to Pay for legal Challenge to driving ban.

[Wanderer]

'Since your usage of the car seems predominantly for business purposes, and since the director feels that the revocation of an employee's driving license will almost certainly adversely impact business, the company can be justified to spend, under its legal expenses head, fees as can be considered reasonable to explore options to keep the client engagement alive.

When I read your first post, (and putting aside the moral issues for a second) that was my reaction too. It's a necessary expense to save the company money and a prudent director would take such action so I would think it should be allowable. If you got investigated they may disallow it, but given the concise professional advice you have taken I doubt that you could be penalised. Surely there are plenty of precedents where cases like this have been argued by a company appointed solicitor?

For your next question you should ask if you can get a speed limiter/cruise control/camera warning/laser jammer system on company expenses too. Might be counted as accessories on a company car (and taxed) but what about if you used a private car and claimed mileage?

Good luck with keeping your licence. Losing a contract worth thousands due to a few "candid camera" moments isn't exactly fair punishment, but you will probably have to make a serious attitude adjustment in your driving.

[moorfield]

Get your company to employ a chauffeur

Actually - not a bad idea. If the company provides a car + chauffeur (pay the missus a salary to do this) it could be argued this is solely for business purposes (have to be careful there mind).

[Robot]

I have been convicted and endorsed with 3 penalty points which will bar me from driving for 6 months. This will, for all intenets and purposes, make me give up my contract as the time / cost of commute can no longer be justified.

I know that companies cant pay fines for employees. But can they pay for their employees' legal challenge if the conviction costs the company revenue and also a client?

I have had different views from 2 accountants so just thoguht I would test the waters here.

Get your company to employ a chauffeur

[moorfield]

The company can pay your legal costs but this would be a taxable benefit on your self-assessment.

I would either draw additional divis, or salary (reduces corp tax, increases ni) to cover your costs and fine, and just take the tax hit - ie keep it simple, avoid additional accountants or lawyers fees trying to get round it, don't draw attention to yourself with dodgy expense claims or benefits etc., and sit back and reflect on what you can do next time around to avoid the 3 points.


Edit: But by all means, if you want to put yourself ahead of the rest of us in the "look at me Hector/Danny/Vince, I'm not dodgy, honest" queue, do it.

[Clare@InTouch]

The situation is no different from where you require a visa to work in, say, China. Revocation of such a visa, even through individual misdemeanours of the employee, will cause the company to lose business. The in house lawyer will absolutely explore all legal options to seek a challenge to such a revocation even thoguh it could be argued that another employee (or a Chinese employee) could be employed in this situation to do this work.'

I'm not sure I agree with that. If you got your visa revoked you could no longer work in a country, making work impossible. The journey to work becoming a bit longer due to the need to take a train rather than a car isn't really the same thing.

[AnthonyQuinn]

Thanks for the responses. I didnt feel that it would be a genuine business expense. But my accountant was of the following view (Copying from his email)

'Since your usage of the car seems predominantly for business purposes, and since the director feels that the revocation of an employee's driving license will almost certainly adversely impact business, the company can be justified to spend, under its legal expenses head, fees as can be considered reasonable to explore options to keep the client engagement alive.

Remember if your company employed a full time lawyer, she / he would probably do this work and he wouldnt charge his time to the relevant employee. This is purely a business expense.

HOWEVER A COMPANY CANNOT PAY AN EMPLOYEES' FINES AND PENALTIES AND CLAIM IT AS A BUSINESS EXPENSE. SO COURT FEES AND FINES WILL NOT BE ALLOWABLE. But legal consultancy is.

The situation is no different from where you require a visa to work in, say, China. Revocation of such a visa, even through individual misdemeanours of the employee, will cause the company to lose business. The in house lawyer will absolutely explore all legal options to seek a challenge to such a revocation even thoguh it could be argued that another employee (or a Chinese employee) could be employed in this situation to do this work.'

[ASB]

The company can quite happily pay for your appeal. There is no problem with that whatsoever. Absolutely none.

Those that say it can't are in fact simply wrong.

However, they are probably giving you a fair answer to the question you are probably actually asking. I would think this is likely to be "If the company were to pay this would this be a legitimate deduction for corporation tax purposes". As has been pointed out the answer to this is almost certainly "no".

It may be beneficial for the company to pay the bill and then debate with your accountants how it should be treated. There are the following basic possibilities:-

- Claim it and hope for the best
- Post it to the directors loan account, if you are paying dividends this is likely to be the cheapest option from a tax/ni POV
- Declare it as a bik and hand over the Class 1a NI which I think would be due (not very efficient if you are paid with divis)
- Gross it up as a salary payment paying full tax and NI

Certainly if you were to pay it yourself and then try and expense it there is zero chance of it being allowable - the regime is slightly different in terms of reclaimable expenses and payments the company chooses to make.

Which way ends up costing the least amount of "gross" money is dependant upon your circumstances, if your company does decide to mount a challenge there is at least a small chance it might work out slightly cheaper overall - but it could end up worse.

[Scrag Meister]

If the company was your perm employer and NOT your company, would they pay. Of course they wouldn't!!!!!

Dumb question.

Next!

[Clare@InTouch]

I'd love to know why one accountant the OP spoke to thought it would be allowable though, the logic would be interesting...

[xoggoth]

Hmm. I bet MPs would have put it on their expenses tho.

[d000hg]

It never ceases to amaze me peoples inability to differentiate the difference between personal costs and business costs. How do people run a business yet lack such a basic level of understanding.

Because contractors running businesses are doing it only due to the particular tax and legal situation in the UK, not to run a business for its own sake.

[CheeseSlice]

I have been convicted and endorsed with 3 penalty points which will bar me from driving for 6 months. This will, for all intenets and purposes, make me give up my contract as the time / cost of commute can no longer be justified.

I know that companies cant pay fines for employees. But can they pay for their employees' legal challenge if the conviction costs the company revenue and also a client?

I have had different views from 2 accountants so just thoguht I would test the waters here.

You dont happen to be a contracting surgeon do you?

This guy got away with 12 points!

[northernladuk]

It never ceases to amaze me peoples inability to differentiate the difference between personal costs and business costs. How do people run a business yet lack such a basic level of understanding. Still, makes for interesting reading from time to time....

[mr_woo]

If you already had 9+ points you must drive like a complete Gene Hunt and so therefore deserve your ban.

[Clare@InTouch]

Only if driving were the job, and the company could not trade without that specific employee being able to drive.

Legal fees for an employee's driving ban are in no way "wholly, exclusively and necessarily" for the purposes of the trade of the company. You could still do the work if you wanted to, its your own decision that the cost of the commute is no longer worth it to you.

You could rent accomodation closer to the site, and that would be allowable.