Setting up as a business

Vonhelmet · 28 Sep 2011 at 15:02

mrk1@1 said:
if you can demonstrate that it is hospitality (you wouldn't use the term entertainment) and forms part of business development then you can justify it.

this may require you to have a very clearly defined business development, marketing and company expense policy which works both ways as it; enables you to undertake such activities but also sets out a prescriptive approach which of course limits some good old ad-hoc pub time with your colleagues. for example you could pre allocate £2k in your annual budgets and business plan for hospitality and business development, it would be poor performance not to meet your own kPIs

Hospitality still sounds like business entertaining to me...

mattyg · 28 Sep 2011 at 15:06

Just because YOU call it hospitality doesn't mean HMRC will

A2Z · 28 Sep 2011 at 15:21

You definately can claim the VAT back on food for expenses - but for the UK it has to be STAFF 'entertainment' not client, ie. if you take a potential client out to dinner you cant claim that, but if a manager takes their whole team out for lunch then you can. Also food only, no alcohol.

Germany is the best place for claiming back VAT though...you can claim back more or less anything..including alcohol.

Scrutinize · 28 Sep 2011 at 15:49

Vonhelmet said:
Hospitality still sounds like business entertaining to me...

this isn’t supposed to be some sort of carte blanche approach to it and the appropriateness will depend on whether it can be demonstrated if it is for genuine business development purposes.

From HMRC, In general, entertainment counts as business-related if its purpose is to:

•discuss a particular business project
•maintain an existing business connection
•form a new business connection

further guidance here http://www.hmrc.gov.uk/guidance/480.pdf,

para. 20.4 The expenses of a particular occasion are normally allowable if the purpose was to discuss a particular business project. They may also be allowable if the purpose was to maintain an existing business connection or to form a new one, even though no business was actually done

here http://www.hmrc.gov.uk/paye/exb/a-z/e/entertainment.htm and here http://www.hmrc.gov.uk/manuals/eimanual/eim32565ct.htm.

here for the long slog http://www.legislation.gov.uk/ukpga/2003/1/contents but in general part 5 covers it inc. section 336 onwards

336 Deductions for expenses: the general rule

(1) The general rule is that a deduction from earnings is allowed for an amount if:

-(a)the employee is obliged to incur and pay it as holder of the employment, and.
-(b)the amount is incurred wholly, exclusively and necessarily in the performance of the duties of the employment.

mattyg · 28 Sep 2011 at 15:55

Fantastic Monaco grand prix here we come.

anksta · 3 Oct 2011 at 13:20

I've just done the register for self assessment form on the HRMC website, says it'll take four to six weeks to process, all I did was name and address in though.

Am I alright for the next 6 weeks then or what? The threshold for taxable income is 7555 though now according to this http://www.uktaxcalculators.co.uk/ which means I've got a bit longer.

I'm gonna start saving now rather than getting screwed when it comes round but I've just filled that form in, the only expense I've incurred I think is the chair I bought in the OP, that was 80 quid, does that count as a deduction or an allowance?

I'm gonna spend the afternoon reading up about this I think, better do it now while I've got the time I suppose.

Pudney · 3 Oct 2011 at 14:29

Scrutinize said:
this isn’t supposed to be some sort of carte blanche approach to it and the appropriateness will depend on whether it can be demonstrated if it is for genuine business development purposes.

From HMRC, In general, entertainment counts as business-related if its purpose is to:

•discuss a particular business project
•maintain an existing business connection
•form a new business connection

further guidance here http://www.hmrc.gov.uk/guidance/480.pdf,

para. 20.4 The expenses of a particular occasion are normally allowable if the purpose was to discuss a particular business project. They may also be allowable if the purpose was to maintain an existing business connection or to form a new one, even though no business was actually done

here http://www.hmrc.gov.uk/paye/exb/a-z/e/entertainment.htm and here http://www.hmrc.gov.uk/manuals/eimanual/eim32565ct.htm.

here for the long slog http://www.legislation.gov.uk/ukpga/2003/1/contents but in general part 5 covers it inc. section 336 onwards

336 Deductions for expenses: the general rule

(1) The general rule is that a deduction from earnings is allowed for an amount if:

-(a)the employee is obliged to incur and pay it as holder of the employment, and.
-(b)the amount is incurred wholly, exclusively and necessarily in the performance of the duties of the employment.

ITEPA 2003, s356 (1)

No deduction from earnings is allowed under this Part for expenses incurred in providing entertainmnet or a gift in connection with the employer's trade, business, profession or vocation.

ITEPA 2003, s356 (3a)

"entertainment" includes hospitality of any kind

Now, I'm going to admit, I work in corporate tax and therefore not exactly an expert on the personal side of things. But my understanding is that entertaining/hospitality to clients is not allowable.

Also, whilst HMRC's website may say one thing, it is in no way legally enforceable. In fact there have been many instances where someone has been taken to tribunal and lost for following HMRC guidance which is in fact wrong.

Participant · 3 Oct 2011 at 14:32

Pudney said:
Also, whilst HMRC's website may say one thing, it is in no way legally enforceable. In fact there have been many instances where someone has been taken to tribunal and lost for following HMRC guidance which is in fact wrong.

That's always made me laugh, the fact that HMRC are not the foremost experts on their own rules. I once wrote to them with a query on the place of supply of contracted freight and they recommended that I purchase and refer to Tolley or something.

Pudney · 3 Oct 2011 at 14:39

Robbie G said:
That's always made me laugh, the fact that HMRC are not the foremost experts on their own rules. I once wrote to them with a query on the place of supply of contracted freight and they recommended that I purchase and refer to Tolley or something.

The only thing I use HMRC for is references to legislation if I'm having trouble finding things. Otherwise I assume it's wrong or out of date!

Vonhelmet · 3 Oct 2011 at 15:40

Robbie G said:
That's always made me laugh, the fact that HMRC are not the foremost experts on their own rules. I once wrote to them with a query on the place of supply of contracted freight and they recommended that I purchase and refer to Tolley or something.

Yeah, the thing is they're not HMRC's rules. They're rules written by the draftsmen to meet the requirements of the government, and all the evidence is that the draftsmen hit the crack pipe hard.

Participant · 3 Oct 2011 at 15:56

Vonhelmet said:
Yeah, the thing is they're not HMRC's rules. They're rules written by the draftsmen to meet the requirements of the government, and all the evidence is that the draftsmen hit the crack pipe hard.

Hmmm I take your point but they're HMRC's rules insofaras if I paid someone to design my garden, it'd still be my garden.

Vonhelmet · 3 Oct 2011 at 16:03

HMRC don't devise the rules - they just have the unenviable job of enforcing them.

Participant · 3 Oct 2011 at 16:08

Well presumably they paid someone to devise the rules for them...ergo they become their rules. I didn't devise my garden but I still own it.

The_Judge · 3 Oct 2011 at 16:20

Jesus wept, he's going to be earning less than 20k. He doesn't need to think about VAT or accountants until he starts earning big bucks.