Claim tea coffee sugar?

ioscorpio

I recently went on a HMRC course and was told a sole trader cannot claim tea, coffee and milk as an expense, even though accountants tell you that you can.

Pennywise

ioscorpio wrote: »

I recently went on a HMRC course and was told a sole trader cannot claim tea, coffee and milk as an expense, even though accountants tell you that you can.

I'm an accountant and never given carte blanche for a client to claim tea, coffee & milk!

What any business can do is claim for the cost of providing tea, coffee & milk for their customers, suppliers, staff, etc., not themselves. The way it works is to claim it all and then make a small add-back for private consumption.

However, I'm very surprised that the HMRC person bothered wasting everyone's time on such a trivial matter. It's a great shame that they don't spend more time on the important things. They may be correct on this point, but in 25 years, I have never seen a real tax inspector arguing about incidental private refreshments - they are more reasonable and spend their valuable time on bigger things.

fengirl_2

As an ex HMIT I agree with Pennywise. There is no glory in adding back £3 for private biscuits! I suspect that someone on the course raised this rather than it being on the curriculum.

moonrakerz

Pennywise wrote: »

However, I'm very surprised that the HMRC person bothered wasting everyone's time on such a trivial matter.

You seem to forget that these were the very same people who wasted huge amounts of taxpayer's money trying to prove in Court that a Jaffa Cake was a biscuit - and lost !
And more recently they tried to prove, against all legal advice, that a Pringle's was a potato crisp - they lost again !

:D

ioscorpio

It was someone on the course who raised it, they did not have customers going to their house or have any staff, the HMRC woman was vague about everyday expenses, she just said you had to justify it "If I was not in business would I have this expense"

Cook_County

She is probably thinking Mallalieu v Drummond (which disallowed black clothing for a barrister) but even that is less relevant today...

Pennywise

ioscorpio wrote: »

It was someone on the course who raised it, they did not have customers going to their house or have any staff, the HMRC woman was vague about everyday expenses, she just said you had to justify it "If I was not in business would I have this expense"

OMG. The HMRC woman clearly doesn't know what she's talking about. "If I was not in business would I have this expense" is completely wrong - it is a good starting point for the obvious expenses, but completely misses the ability to claim a proportion of costs that are partly business and partly private, such as home telephone/broadband, home rates/insurance/power/mortgage/rent, etc. It is a very dangerous basis upon which to prepare your tax returns!

ioscorpio

With regards to phone etc, she just said you have to be very careful if you have a TV/broadband/phone package. For heating etc. she said only claim heating, lighting and power, some circumstances council tax and only water if heavy usage. She said to calculate between that way or £2 per week.

Although on the Self Assessment course the woman said you can't claim £2 per week as that is only for employees and said I should have gone on the Becoming Self Employed course first as they explain all about expenses on that. Which is why I went on the that course as well, but felt that "Every business is different, so there is no basic list". I know I can't claim for suits, but I only wear them for work to see clients. I don't know why people say you can claim for everything and hardly pay any tax when you are self employed, in reality it's does not work out that way, I would have been better off by being employed by the company that I worked for, rather that being classed as self employed by them for the amount of effort it takes to keep your records and fill the self assessment in. At the end of the day you are only saving 22% not the full cost of the expenses.

This tax year I have changed job and gone back to being employed, so at least when I claim 40p mileage, I will get 40p per miles rather than 22% of 40p per mile.

RANT OVER

Pennywise

If you are a sole trader (i.e. not a director or your own ltd co), then HMRC can be quite generous with allowances for using your own home, including mortgage interest - have a look at their manual:

http://www.hmrc.gov.uk/manuals/bimmanual/BIM47825.htm

It does seem that the woman giving the course is a little out of date - it certainly used to be the case that you couldn't claim a proportion of your mortgage interest etc., likewise it used to be the case that you couldn't claim a proportion of your home telephone rental, broadband etc on the grounds of "duality of purpose", but all that has changed recently!