Reply to: Can my business purchase a consumer landline and broadband deal?

[BolshieBastard]

...or does it have to be a business land line and broadband to claim as a business expense?

As long as it is registered to my company's name and business address, do HMRC care what type of deal the provider is supplying?

(*edit sorry I think this should have gone in Accounting/Legal)

I asked a question, asked for advice, tried to understand it, asked my accountant, then posted that advice to see how you guys would interpret it. I don't understand what part of that would frustrate you. I'm being completely honest and admittedly naive but that's the point of a forum. To gauge public opinion and hopefully a better understanding.
Not quite sure why that warrants criticism and claims of 'the op doesn't want to listen to advice'

Tommy, the answer is no, your business cannot buy a consumer BB package and consumer landline. The provider will prevent you doing this at the order stage. (Try it if you dont believe me.)

You can purchase as a retail customer, what you call consumer BB and landline. You can also claim part of this for business use but clearly, you cannot claim all of the consumer package as business use.

HMRC care because if it is business related, there is the question of VAT to be accounted for. The BB \ landline supplier will care because business telecomms charge higher prices (due to higher traffic or so they say!) and if you are using consumer packages for business purposes, they'll be losing money.

[Tommy]

I asked a question, asked for advice, tried to understand it, asked my accountant, then posted that advice to see how you guys would interpret it. I don't understand what part of that would frustrate you. I'm being completely honest and admittedly naive but that's the point of a forum. To gauge public opinion and hopefully a better understanding.
Not quite sure why that warrants criticism and claims of 'the op doesn't want to listen to advice'

[SueEllen]

Thanks to everyone whose helped. Northernlad and SueEllen, I bet you regularly have a dig at any new poster with a genuine question. I actually am trying to understand the options available to me. I would think that's just human nature to understand the proper way of doing things and looking at the best value option. I do appreciate the help all the same

Actually I don't but I do get fed up with posters who are told by others in long posts another way to do things with reasons why, who then indicate the alternative advice given is wrong because it differs from their accountant.

Tax rules aren't always black and white, and it doesn't help having accountants out there who get confused with the self-employed who run businesses and small limited companies. *

I suggest, in your case, every time your accountant tells you something ask them clearly is this applicable for small limited companies.

There was an accountant who was used by some on this board, and was a regular poster, who defrauded some of them, defrauded other members of the public doing something else and ended up in prison. There are also posters who come on this board and have complaints about their accountants mucking up something. These posters have to clear up the mess themselves with HMRC including paying any fines.

*I'm not picking on you in-particular as it's a common problem.

[Tommy]

Have to agree with you there as if the op had any sense who would realise while home packages are cheaper there is often a reason for them being cheaper, and that a business cannot sign up for a home package.

I know a couple of people who have a business package for their broadband who don't have a business.

Thanks to everyone whose helped. Northernlad and SueEllen, I bet you regularly have a dig at any new poster with a genuine question. I actually am trying to understand the options available to me. I would think that's just human nature to understand the proper way of doing things and looking at the best value option. I do appreciate the help all the same

[SueEllen]

Eitherway it looks like the op is just looking for the answer he wants to see again.

Have to agree with you there as if the op had any sense who would realise while home packages are cheaper there is often a reason for them being cheaper, and that a business cannot sign up for a home package.

I know a couple of people who have a business package for their broadband who don't have a business.

[northernladuk]

Yeah, you're right. I'm sure they have bigger fish to fry than that and so do I for that matter.

You might get some inspector who decides to get argumentative about it and if that's the worst they can come up with, I would just put up my hands, smile and say "OK, that's fairy muff, you got me there". Pay them the money back, shoo them out the door and get on with running your business. I

Life's too short to agonise over these things.

I do and don't agree. Life is to short to agonized....so don't do it imo. Give that advice to a newbie who doesn't understand what the risks are and in 4 years time the tax man picks up on all the £120 other items some who doesn't understand puts in with interest and fine over the last 6 years and the op is in trouble. Do it right or don't do it at all.

Also the hmrc does't come looking for 120 quid but they will find it on top of whatever else you are doing they came looking for

Eitherway it looks like the op is just looking for the answer he wants to see again.

[Wanderer]

Is it really worth their time to look into a £120 a year item or indeed argue about it?

Yeah, you're right. I'm sure they have bigger fish to fry than that and so do I for that matter.

You might get some inspector who decides to get argumentative about it and if that's the worst they can come up with, I would just put up my hands, smile and say "OK, that's fairy muff, you got me there". Pay them the money back, shoo them out the door and get on with running your business.

Life's too short to agonise over these things.

[Contreras]

Asked my accountant about this, and he said a lot of SOHO users will have a residential package as it's cheaper overall. You then expense to the company for the use of it.

He said it goes on the P11D as a BIK but then this is offset on the personal tax return

Could someone please explain this in real beginners terms to me. So if I expense the company for around 80% usage per month, does this mean I transfer (80% of my broadband bill, say £28) straight from my business account to my personal and this would be written on Section N on the P11D. I would then receive a different tax code and would pay tax on this benefit through PAYE?

So what does he mean by this would be offset on the personal tax return?

I think what your account is saying, is:

Get a residential package because it's cheaper.

Therefore the contract with the telco will be in your name, because the telco won't accept businesses on a residential contract.

Claim expenses from YourCo for 80% of the cost. Just as you would to reclaim any other expenses.

YourCo gives you a P11D which says you have received a benefit in kind. In effect YourCo is paying for your telephone bill in lieu of salary (at least that's the way HMRC see it), so you owe tax on the amount you just claimed. HMRC may adjust your tax code for this.

On your personal SA tax return you need to copy the figure from the P11D as a received benefit, but also declare the same amount was 'incurred wholly for business', the net difference (in this case zero) is what you actually pay tax on.

Note that this isn't specific to claiming the telco bill. You will be declaring any travel, accommodation & subsistence expenses in the same way already, so claiming the telco bill shouldn't be any extra effort. Nixon Williams posted a useful summary here.

[BolshieBastard]

Whenever I see these sort of threads, I think to myself HMRC are concerned about the £1000s of pounds you dont pay every month in two lots of NI. They arent concerned about the £10 you save (if that) on putting broadband / telephone through the accounts.

Is it really worth their time to look into a £120 a year item or indeed argue about it?

Notice how we never get anyone who was investigated on here who says things like "They said the notepad (as in paper) wasnt wholey and exclusively used for the business as I sometimes wrote food shopping lists on it."

Id feel sorry for people who say, right the cost of broadband is £38 a month, and I use the home office 8 hours x 5 times a week. Therefore its 22% of use for the business which is £8.36 a month so Ill put that through the accounts. Its just not worth it.

HMRC will investigate for any number of reasons, from compliance to suspected fraudulent accounting etc.

If HMRC investigate you, these are exactly the things they will say you have falsified in your accounts especially in the current climate. I dont think they'd be that bothered about a 50p notepad (but it wouldnt surprise me if they did pick it up either!) but things like BB, laptops and the like, they will want their pound of flesh for.

[BolshieBastard]

...or does it have to be a business land line and broadband to claim as a business expense?

As long as it is registered to my company's name and business address, do HMRC care what type of deal the provider is supplying?

(*edit sorry I think this should have gone in Accounting/Legal)

Normally the landline and broadband providers will not sell non business products to a business. So, if you wanted to buy retail customer broadband and line in the business name, paid for from a business bank account, they'd normally refuse the order.

However, if you bought retail BB and line in your own name and paid via your personal account, you could claim this as a business expense. However, even then, you'd only be legally able to claim the business element if used for the business. Likewise, you'd only legally be able to claim the VAT relevant to business use.

[escapeUK]

Whenever I see these sort of threads, I think to myself HMRC are concerned about the £1000s of pounds you dont pay every month in two lots of NI. They arent concerned about the £10 you save (if that) on putting broadband / telephone through the accounts.

Is it really worth their time to look into a £120 a year item or indeed argue about it?

Notice how we never get anyone who was investigated on here who says things like "They said the notepad (as in paper) wasnt wholey and exclusively used for the business as I sometimes wrote food shopping lists on it."

Id feel sorry for people who say, right the cost of broadband is £38 a month, and I use the home office 8 hours x 5 times a week. Therefore its 22% of use for the business which is £8.36 a month so Ill put that through the accounts. Its just not worth it.

[northernladuk]

So what would you do if you were me?
New home. No phone line, broadband installed yet. Dedicated office. Mainly business use, will be a few hours private use in the evening perhaps.

Would you just set up broadband and a landline in my personal name and apportion the cost? Then there are some benefit in kind implications right? I just want to do the right thing.

Read this article:
Tax issues for a home-based limited company - FreeAgent

Decent read I thought. Not sure what you all think

Putting through the business might have saved me 5quid a month or so which just didn't make it worth bothering about but I do use it for a lot more personal stuff than you it seems.

[Tommy]

Asked my accountant about this, and he said a lot of SOHO users will have a residential package as it's cheaper overall. You then expense to the company for the use of it.

He said it goes on the P11D as a BIK but then this is offset on the personal tax return

Could someone please explain this in real beginners terms to me. So if I expense the company for around 80% usage per month, does this mean I transfer (80% of my broadband bill, say £28) straight from my business account to my personal and this would be written on Section N on the P11D. I would then receive a different tax code and would pay tax on this benefit through PAYE?

So what does he mean by this would be offset on the personal tax return?

[Tommy]

As was said before is it really worth it? Remember all you are saving the tax on the 35 quid. The rest still comes out of your pocket in the end. Give the tax man plenty to chew on if he does ever come calling though.

So what would you do if you were me?
New home. No phone line, broadband installed yet. Dedicated office. Mainly business use, will be a few hours private use in the evening perhaps.

Would you just set up broadband and a landline in my personal name and apportion the cost? Then there are some benefit in kind implications right? I just want to do the right thing.

Read this article:
Tax issues for a home-based limited company - FreeAgent

Decent read I thought. Not sure what you all think

[northernladuk]

As was said before is it really worth it? Remember all you are saving the tax on the 35 quid. The rest still comes out of your pocket in the end. Give the tax man plenty to chew on if he does ever come calling though.