Reply to: Question about expenses

[FatLazyContractor]

Just ban this bloody awful sockie. If it's not a sockie just ban it anyway to be sure.

I never told cojak about your psychocandy sockie, have I?

[Scruff]

Include the penis extension and you can get a right cock-up in the deal!

[LondonManc]

I was looking at having an extension built and asked my accountant if I could claim as there's going to be an office as part of it. He said that it's better not to given the tax implications and the business then technically owning part of the house and the complications involved. Don't bother was the general advice.

[greenlake]

Would you than say ,: Dont do it ?

Go ahead and do it, and do it BIG!! What could possibly go wrong?

[SueEllen]

Would you than say ,: Dont do it ?

STOP!!!

No don't do it.

Build the extension out of your personal funds. Then if your business requires you to work at home more than 3 days per week have a talk to your accountant about office furniture.

[ASB]

Thanks ASB for comprehensive answer, I am not sure this will be sop attractive option if I incur tax.
My plan was to put it as a business expense, ( office construction) obtain the necessary invoice and not incur tax. So you saying there is no way around it ?

Let us, for a moment at least, assume it is actually an office.

What you are doing is buying an asset. In this case property.

Since it is an asset it is not an expense and not chargeable to CT. Thats the way it goes. However what is chargeable to CT is the diminution in value of the asset over time (conversely any profit over time would cause a CT liability to arise - the profit element is income).

There is a depreciation rate you can use for capital allowances, I think it might be 3%, but that is just for providing a temporary book value and it should be properly value periodically. If you can be bothered (I certainly can't) you can look up the full treatment on HMRC.

So, in answer to the question you post:- NO. The end.

[It is depreciation that can be charged to tax as I have now explained twice].

Now, if it is not an office there are a host of personal taxation consequence to be considered too. Some of which I outlined.

Now, I know your mate will give you a receipt that says "To: Building new office 20k". I am not sure that either of you realise the extent of criminality in this. To wit:-

- False accounting
- Various forms of tax evasion
- Conspiracy

I'm sure there are plenty of others that could also occur.

It is perhaps not the wisest thing to publish your joint intents on a public forum.

Of course the other side of the coin is you have to get caught. Buy any tax inspection is likely to want a solid paper trail. Curiously when faced with this sort of thing the aveage tax inspector is unlikely to say "yes, that's fine I accept that". They will tend to want to see the asset.

At the end of the day it's your bum you might want to protect in the shower block. Not mine.

[shtek]

Contractor Doctor: Can I claim expenses for building an office in my garden?

Short answer, it's a minefield of tax, business rates and BIK implications.

Would you than say ,: Dont do it ?

[DimPrawn]

Contractor Doctor: Can I claim expenses for building an office in my garden?

Short answer, it's a minefield of tax, business rates and BIK implications.

[northernladuk]

Just ban this bloody awful sockie. If it's not a sockie just ban it anyway to be sure.

[shtek]

thanks

Thanks ASB for comprehensive answer, I am not sure this will be sop attractive option if I incur tax.
My plan was to put it as a business expense, ( office construction) obtain the necessary invoice and not incur tax. So you saying there is no way around it ?

[ASB]

Hi, Have a limited company and doing IT consultancy me dorector and one secretary who i employ . Have a friend who runs a building company, wanted to commission some work for me, thinking of putting it on expenses as building an office) , wanted to spend about 20 K maybe 30k for this. Will be paying to his business and getting invoice
Do you think it is legit?
Any issues could be associated with this.?

Well yes. It's kind of legit.....

As a director it is up to you what you spend the company funds on. Coke, hookers, extensions etc etc are all expenditure which you can legitimately authorise.

So, in that respect no real problem at all.

But beyond that it gets a little tricky.

Firstly any building work is not an expense. It's an asset purchase, end of.

So no deduction for CT. But there is the possibility of capital allowances.

Provided of course it was wholly necessarily etc. Only you know the answer to that. I suspect your view is the same as mine.

Now, if there is benefit to you - and I imagine you know he answer to that too - then you will be getting use of an asset placed at your disposal. There is a regime for that. It costs you lots of personal tax.

So, in summary what you want to do. Provided you are open and honest about it is in fact legit.

You may not like the personal taxation consequences that flow from it though. Not least of which would be the potential loss of your PPR CGT exemption.

[stek]

HI, Sorry if I posted in the wrong part of the forum.
The answers to some responses, the office which I want to build is just going to be extention to one of my residential properties. It is technically converting existing conservatory into permanent room. but the builder is my friend so I will ask him to write whatever receipt I need.
I just wanted to know if this is legitimate, and if I shall keep the budget to some level.
I am not going to build a mantion. just couple of rooms, the cost shall be low.

Dodgy beyond belief, hope you both get shafted by Hector.......

[Mincepie]

How many bedrooms will the new office have?

[Platypus]

Of course it's legitimate. You can do what you damn well please.

Whether you can offset the expense against CT, or whether it will be be treated as personal income, is a different question. One that I feel you already know the answer to.

[cojak]

This is obviously some new meaning of "legitimate" that I was previously unaware of.

legitimate = 'Will I get caught?'