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Where Taxpayers and Advisers Meet

expenses

kennybond
Posts:8
Joined:Wed Aug 06, 2008 4:08 pm

Postby kennybond » Wed May 21, 2008 3:13 am

Can anyone advise me on the basis of expenses. I run a small mortgage business, when sometimes i meet with clients during the course of the meeting I may buy a sandwich and or drinks ( teas / coffee) whilst I transact my business. I have been told that this is entertaining and is not allowable or is this an allowable expense laid out for the purposes of my trade. For information the meeting does not take place at my place of work. If it is allowed can someone point me to the legislation. I beleive this is not entertaining as I am not entertaining.
With thanks

taxattack
Posts:309
Joined:Wed Aug 06, 2008 3:44 pm

Postby taxattack » Wed May 21, 2008 3:36 am

Unfortunately, entertainment is widely defined as "hospitality of any kind", and is disallowed under ITTOIA 2005 S45 for sole traders, and ICTA 1998 S577 for companies.
Regards
chris @ taxattack.co.uk

King_Maker
Posts:6538
Joined:Wed Aug 06, 2008 3:22 pm

Postby King_Maker » Wed May 21, 2008 12:53 pm

I have to concur with taxattack.

kennybond
Posts:8
Joined:Wed Aug 06, 2008 4:08 pm

Postby kennybond » Thu May 22, 2008 1:29 am

I have found a comment on the net stating: Revenue quoted ICTA 1988 section 74. " no sum shall be deducted in respect of any disbursements or expenses, not being money wholly and exclusively laid out or expanded for the purposes of the trade" Could not the meeting with a client and conducting a review with them be conducting my trade? I think the answer may still be as you have advised but still would like to know.

taxattack
Posts:309
Joined:Wed Aug 06, 2008 3:44 pm

Postby taxattack » Thu May 22, 2008 1:47 am

Kenny

S74 (1)(a) is the general "wholly and exclusively" restriction on the deductibility of expenses. Just before the bit you have quoted it reads: "Subject to the provisions of the Corporation Tax Acts..."

S34 ITTOIA has the equivalent general restriction for Income Tax, with the further restriction under S45, as above.

Regards
Chris

kennybond
Posts:8
Joined:Wed Aug 06, 2008 4:08 pm

Postby kennybond » Thu May 22, 2008 2:02 am

Hi
Thanks, sorry to sound a bit thick. But what doesthis actually mean?

taxattack
Posts:309
Joined:Wed Aug 06, 2008 3:44 pm

Postby taxattack » Thu May 22, 2008 3:19 am

There is a general rule which says that you can only deduct (from profits) expenses which are wholly and exclusively for trade purposes. Then there is a special rule which says you cannot have a deduction for entertaining, even though, as in your case, it is for trade purposes.
Chris

kennybond
Posts:8
Joined:Wed Aug 06, 2008 4:08 pm

Postby kennybond » Thu May 22, 2008 3:26 am

Many thanks to all that have helped me here.


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