Reply to: Accountant stated my PC Purchase cannot have VAT reimbursed on Flat Rate VAT scheme..

[craig1]

On the points about significant use above, they're mainly irrelevant if the PC/laptop was bought for work purposes: EIM21613 - Particular benefits: accommodation, supplies and services: meaning of not significant use for private purposes. See example 2 for a fairly extreme example of a work supplied machine being used for 5 minutes a day for work then plenty of other personal use but still being a valid expense.

[malvolio]

OP says it was a company purchase, so it should be allowed

OP didn't say it was for business purposes though. If it has no trading purpose it's not reclaimable, in the same way as buying my team lunch once a month is not reclaimable since they are not my clients so offer no service value (the clue to VAT is in the name). However it is a business expense since I wouldn't buy them lunch if they didn't work for me.

FTAOD I'm not saying it isn't claimable, merely exploring why the accountant might think it wasn't. Anyway, if the OP is confident it is claimable despite his accountant's opinion, it's up to him to put it on the VAT reclaim.

[TheFaQQer]

VAT is not recalimable if it is a personal purchase rather than a business one; VAT is based on the supply of goods or services, so if no supply, no reclaim. Perhaps that's why the OP's accountant was asking the question...

OP says it was a company purchase, so it should be allowed

Yes it was just the Windows PC on the single invoice, with my company name on the top and all the hard disks, graphics card etc itemised on the same single invoice addresssed to my flat rate VAT limited company.

[northernladuk]

Has the OP done the right thing and spoken to his accountant again yet????

[malvolio]

I agree, however this is the position for whether it is claimable as an expense and can be written down in accordance with the capital allowance rules.

However, this wasn't the OPs original question. They were querying the ability to reclaim the VAT (specifically on the FRS). I don't see any reason why it should be different, but I can't find any guidance.

VAT is not recalimable if it is a personal purchase rather than a business one; VAT is based on the supply of goods or services, so if no supply, no reclaim. Perhaps that's why the OP's accountant was asking the question...

[ASB]

The servers I use at work run on a SAN with SSD. I bring stuff home to work on and I have a couple of machines at which run SSDs (they are only about £1 per gig, not that expensive). Working with fairly large data sets, it makes a big difference - these things are really fast.

But really, that has bugger all to do with it because ASB has hit the nail on the head here:



HMRC's manual makes it clear that it's not up to the inspectors to judge if an expenditure is a "good business decision" or not, only if it is "wholly and exclusively" incurred for business reasons. So you could buy an iPad to take notes in business meetings and it's not their place to suggest that you could have done just as well with a pencil and paper. But it is up to them to decide if that expenditure is "wholly and exclusively" for business use and if there is a potential duality of purpose then you will have to justify it.

From the hmrc manual:

You should note that ICTA88/S74 (1)(a) does not include the requirement in the expenses rule for employees that the expenditure be ‘necessary’. Whilst it is reasonable to scrutinise the claimed purpose of an expense you should not attempt to substitute your own judgement for that of the taxpayer. If the taxpayer can show that their only purpose for incurring a particular expense was for their trade, profession or vocation then it does not matter that the same result could have been achieved by different means or that the expenditure in the event fails to achieve the established purpose. Expenditure that is manifestly uneconomic may be an indication that there was another (non-business) reason for it being incurred, in which event you should disallow it.

I agree, however this is the position for whether it is claimable as an expense and can be written down in accordance with the capital allowance rules.

However, this wasn't the OPs original question. They were querying the ability to reclaim the VAT (specifically on the FRS). I don't see any reason why it should be different, but I can't find any guidance.

[d000hg]

You should note that ICTA88/S74 (1)(a) does not include the requirement in the expenses rule for employees that the expenditure be ‘necessary’. Whilst it is reasonable to scrutinise the claimed purpose of an expense you should not attempt to substitute your own judgement for that of the taxpayer. If the taxpayer can show that their only purpose for incurring a particular expense was for their trade, profession or vocation then it does not matter that the same result could have been achieved by different means or that the expenditure in the event fails to achieve the established purpose. Expenditure that is manifestly uneconomic may be an indication that there was another (non-business) reason for it being incurred, in which event you should disallow it.

To paraphrase - if you want to run your company like a dick, that's fine, as long as you do it legally.

[Wanderer]

c'mon. no one "needs" a solid state drive I don't care what you are doing.

The servers I use at work run on a SAN with SSD. I bring stuff home to work on and I have a couple of machines at which run SSDs (they are only about £1 per gig, not that expensive). Working with fairly large data sets, it makes a big difference - these things are really fast.

But really, that has bugger all to do with it because ASB has hit the nail on the head here:

But where does excessive stop it being claimable? (serious question). Surely if the business bought it the text is "wholly and exclusively". It is only if it is being expensed and reclaimed that "wholly necessarily and exclusively" applies.

HMRC's manual makes it clear that it's not up to the inspectors to judge if an expenditure is a "good business decision" or not, only if it is "wholly and exclusively" incurred for business reasons. So you could buy an iPad to take notes in business meetings and it's not their place to suggest that you could have done just as well with a pencil and paper. But it is up to them to decide if that expenditure is "wholly and exclusively" for business use and if there is a potential duality of purpose then you will have to justify it.

From the hmrc manual:

You should note that ICTA88/S74 (1)(a) does not include the requirement in the expenses rule for employees that the expenditure be ‘necessary’. Whilst it is reasonable to scrutinise the claimed purpose of an expense you should not attempt to substitute your own judgement for that of the taxpayer. If the taxpayer can show that their only purpose for incurring a particular expense was for their trade, profession or vocation then it does not matter that the same result could have been achieved by different means or that the expenditure in the event fails to achieve the established purpose. Expenditure that is manifestly uneconomic may be an indication that there was another (non-business) reason for it being incurred, in which event you should disallow it.

[TheFaQQer]

How many of you (including the OP) take work out of your customers environment to work on it at home where you require the high spec puter?

If you don't, this is a pretty easy thing for HMRC to knock back I reckon.

You may very well claim that you require alien technnology to do your super dooper programming - but if HMRC can easily prove you don't do it then do you have a leg to stand on?

When I was working away, I could have walked to London each week to get to client site. However, I chose to catch a train down and travel first class. Just because I can do something slower and more painfully, does that mean that doing it any other way stops it becoming an expense?

I have a separate hard drive for my virtual machine images. I don't need one to do the work, but for a number of reasons, I decided that it would be sensible to do so. I don't need a six-core processor, but for the work that I do at home (which this year has proved to be a lot, but not so much in the past), it makes sense to do so. When HMRC can prove that it's an unnecessary luxury to do so, then we'll all be in trouble because nothing will be a valid expense.

[northernladuk]

Next thing you know, you'll be implying that the OP is a troll

Heaven forbid!!! Perish the thought...

[d000hg]

How many of you (including the OP) take work out of your customers environment to work on it at home where you require the high spec puter?

If you don't, this is a pretty easy thing for HMRC to knock back I reckon.

You may very well claim that you require alien technnology to do your super dooper programming - but if HMRC can easily prove you don't do it then do you have a leg to stand on?

When HMRC bring in an expert on software development who can tell me the hour a day I save on compiling code isn't relevant, I guess we'll find out.
I work 100% from home. Anyone who just uses their PC to send invoices is clearly taking the p***.

[prozak]

How many of you (including the OP) take work out of your customers environment to work on it at home where you require the high spec puter?

If you don't, this is a pretty easy thing for HMRC to knock back I reckon.

You may very well claim that you require alien technnology to do your super dooper programming - but if HMRC can easily prove you don't do it then do you have a leg to stand on?

[TheFaQQer]

Doesn't answer question why the accountant wouldn't accept it but the OP doesn't seem to have spoken to him to ask him why not yet.

Next thing you know, you'll be implying that the OP is a troll

[northernladuk]

But where does excessive stop it being claimable? (serious question).

Surely if the business bought it the text is "wholly and exclusively". It is only if it is being expensed and reclaimed that "wholly necessarily and exclusively" applies.

Surely there is a reasonable argument (would it sway HMIT?) that even though it is arguable "over the top" provided it is only used for business (or such personal use as occurs meets the defined rules by HMRC) then it passes wholly and exclusively.

cf. visiting "posh client co" which has very expensive office furniture rather than a two bob ikea table. Does this fail because it is not "necessary".

This is the bottom line really and also how much effort will the HMRC put in to quantifying it. I expect the reality of the situation is they won't question it and if they do a simple bit of technical befuddling will do the job.

The only real sanity checks are the person claiming depending on his risk aversion and the accountant to make make sure the OP knows what he is doing. Past that I can't see how HMRC will care tbh.

Doesn't answer question why the accountant wouldn't accept it but the OP doesn't seem to have spoken to him to ask him why not yet.

[d000hg]

Maybe the accountant knows that this is excessive for requirements just as the OP has already admitted?

But where does excessive stop it being claimable? (serious question).

Surely if the business bought it the text is "wholly and exclusively". It is only if it is being expensed and reclaimed that "wholly necessarily and exclusively" applies.

Surely there is a reasonable argument (would it sway HMIT?) that even though it is arguable "over the top" provided it is only used for business (or such personal use as occurs meets the defined rules by HMRC) then it passes wholly and exclusively.

cf. visiting "posh client co" which has very expensive office furniture rather than a two bob ikea table. Does this fail because it is not "necessary".

Exactly - some employers boast about Aeron chairs, top-spec PCs with dual 30" monitors, etc.

Hell even a MacBook Pro is approaching £2k, I doubt HMRC would tell you that using Apple was inappropriate