Reply to: Cost relating to working while travelling?

[speling bee]

Why bother? Either scam the whole lot or not claim it.

Of course. I was merely laying out how it would work in a real business / employee situation, to clarify why there is no point in putting it through the books (if honest).

[TheFaQQer]

Forget for the moment that you're a tax dodging spiv operating a Ltd for tax advantage, and I think this is the correct scenario:

The company needs work doing. The employee is on the train for personal reasons and can only do the work from first class. The company pays for the 1st class ticket upgrade as a legitimate business expense. The employee declares it as a BiK and pays the tax.

Why bother? Either scam the whole lot or not claim it.

[TheCyclingProgrammer]

It's absolutely fine to do it, it's just there are tax implications

The correct answer to pretty much any question on here that starts with "Is it ok for my company to...".

[Clare@InTouch]

You're not even close. Just because someone pushes back on an answer they're given doesn't mean they are looking for a specific outcome.

And I wasn't asking if doing it that way would have any benefit, I was asking if it was correct.

It's absolutely fine to do it, it's just there are tax implications

[d000hg]

Sorry, Clare. That is not the required answer. Anyone else?

You're not even close. Just because someone pushes back on an answer they're given doesn't mean they are looking for a specific outcome.

And I wasn't asking if doing it that way would have any benefit, I was asking if it was correct.

[speling bee]

That is clearly just dishonest, and you're doing it on the hope you will almost certainly get away with it. The thing is my conscience would be totally clear if things played out as described and I was genuinely doing it for work... but knowing HMRC would definitely not see it this way makes it seem immoral even so.

Interesting view. Do the professionals agree?

You can add something in and then declare it as a benefit in kind, but that's no real benefit as you'll pay tax on it personally then. Your company will save 20% CT and you'll pay 20% income tax, plus have less of your basic rate band available for dividends.

Sorry, Clare. That is not the required answer. Anyone else?

[Clare@InTouch]

You can add something in and then declare it as a benefit in kind, but that's no real benefit as you'll pay tax on it personally then. Your company will save 20% CT and you'll pay 20% income tax, plus have less of your basic rate band available for dividends.

[d000hg]

However, there is a difference between it not being spotted (ie you "get away with it") and it being ok. I'm sure a fair few people have put their lounge's sofa through as fixtures and fittings, the annual family holiday as travel/accommodation etc and got away with it. Doesn't make it ok.

Obviously your situation isn't as clear cut wrong, but looking at it more from a "will I get caught" perspective is drifting away from whether it's allowable or not.

That is clearly just dishonest, and you're doing it on the hope you will almost certainly get away with it. The thing is my conscience would be totally clear if things played out as described and I was genuinely doing it for work... but knowing HMRC would definitely not see it this way makes it seem immoral even so.

Forget for the moment that you're a tax dodging spiv operating a Ltd for tax advantage, and I think this is the correct scenario:

The company needs work doing. The employee is on the train for personal reasons and can only do the work from first class. The company pays for the 1st class ticket upgrade as a legitimate business expense. The employee declares it as a BiK and pays the tax.

Interesting view. Do the professionals agree?

[speling bee]

Ah, so these kind of "minimal investigations" do exist? That's what I wasn't aware of - I thought you were either investigated after random selection or you weren't.

Forget for the moment that you're a tax dodging spiv operating a Ltd for tax advantage, and I think this is the correct scenario:

The company needs work doing. The employee is on the train for personal reasons and can only do the work from first class. The company pays for the 1st class ticket upgrade as a legitimate business expense. The employee declares it as a BiK and pays the tax.

[Maslins]

Ah, so these kind of "minimal investigations" do exist? That's what I wasn't aware of - I thought you were either investigated after random selection or you weren't.

My understanding is some investigations are entirely random, but the majority are triggered by figures looking "odd" when compared to similar companies.

Granted, you having a £50 or whatever upgrade in your travel costs is highly unlikely to lead to you getting your travel costs looked into...unless possibly your travel costs are way above average anyway...but then the £50 in itself would be insignificant.

However, there is a difference between it not being spotted (ie you "get away with it") and it being ok. I'm sure a fair few people have put their lounge's sofa through as fixtures and fittings, the annual family holiday as travel/accommodation etc and got away with it. Doesn't make it ok.

Obviously your situation isn't as clear cut wrong, but looking at it more from a "will I get caught" perspective is drifting away from whether it's allowable or not.

My personal view, the trip is personal, and whilst the upgrade may be largely for business reasons, this doesn't change the fact that the entire cost only came about due to personal choices, not business ones. Hence I'd say not allowable.

[d000hg]

A VAT inspection or a business records check, or a PAYE check if they decide to look into the P11D figures and it's shown there. All they would need to do is ask what was in a certain category, or ask to look at any claims made by the directors/employees.

Ah, so these kind of "minimal investigations" do exist? That's what I wasn't aware of - I thought you were either investigated after random selection or you weren't.

[LisaContractorUmbrella]

I cannot possibly see they would find it unless they were already investigating me. Can you outline a realistic scenario where that could happen given how little is disclosed in a reduced CT return?

Just claim it then - accountants are advising you not to but go for it if you think you can justify it. Just bear in mind that HMRC come calling, if you have claimed 1 dodgy expense they will assume that ALL your expenses could be dodgy which means they will look at all of them. They will then assume that you are the type that may get a bit creative with their CT or their VAT or any PAYE. They then might decide to look at all your contracts over the last millennium to see if you should have been inside IR35. They will then work out how much tax you owe - based on absolute worst case scenario, apply interest and penalties depending on what they find. They will then pop back to see you on a regular basis to make sure that you listened to what they told you during their 12 month visit during which they dissected every possible millimeter of your business.

Anyway - your call

[Clare@InTouch]

I cannot possibly see they would find it unless they were already investigating me. Can you outline a realistic scenario where that could happen given how little is disclosed in a reduced CT return?

A VAT inspection or a business records check, or a PAYE check if they decide to look into the P11D figures and it's shown there. All they would need to do is ask what was in a certain category, or ask to look at any claims made by the directors/employees.

[d000hg]

Only if HMRC found out you'd claimed it. But then if they do find it, they may wonder what else you've claimed that might be arguable. It's a long shot, but depends on your attitude to risk.

I cannot possibly see they would find it unless they were already investigating me. Can you outline a realistic scenario where that could happen given how little is disclosed in a reduced CT return?

[speling bee]

Claim it. There's no chance of an investigation, and if you do get one, you explain it and HMRC go away.

That's the response you obviously want to hear, so just claim it and enjoy your journey.

And treat yourself to a decent bottle of claret through the books as it will help you concentrate. It shows HMRC that you are confident in your position and not sneaking around on the sly.