solely, wholly and exclusively

Rachel

Sorry having mental block.

What is the correct phrase meaning entirely business use. I am getting twisted up.

jilt

'wholly and excusively for the porpose of the business' I believe.

Rachel

Thanks

deanshepherd

..or 'wholly, exclusively and necessarily' for employees expenses.

Monsoon

Yep.

Business expenses incurred by the business have to be Wholly and Exclusively to be allowable against tax.

Employees expenses have to be WEN (wholly, exclusively and necessarily)

Business expenses don't have to have the "necessarily" in there. Can you imagine a conversation with a tax inspector: "That third plant in your office isn't necessary." "But we wanted it, it makes the office a nicer working environment. And anyway, it's my profits I'm spending" "Well, I'm not letting you have it. I personally don't deem it necessary."

Rachel

Thank you. Just struggling with a client at the moment who thinks they can claim for nearly everything this year as they haven't done so well and didn't claim for everything last year (ie use of home, general expenses) as last year they were trying to get a mortgage based on the accounts unbeknown to me. Grrrrrr

Monsoon

Rachel wrote: »

Thank you. Just struggling with a client at the moment who thinks they can claim for nearly everything this year as they haven't done so well and didn't claim for everything last year (ie use of home, general expenses) as last year they were trying to get a mortgage based on the accounts unbeknown to me. Grrrrrr

Haha. Accounts is accounts. You can't have one set of numbers for the bank and another for the taxman. Try telling that to some clients though!

jilt

Monsoon wrote: »

Haha. Accounts is accounts. You can't have one set of numbers for the bank and another for the taxman. Try telling that to some clients though!

Damn! Never gonna get that mortgage

Rachel

Client has instructed me to put the amounts through and she will sort out any HMRC investigation - I didn't threaten this she brought it up. Makes me wonder why she is paying me not completely ignore my advice.

Monsoon

Rachel wrote: »

Client has instructed me to put the amounts through and she will sort out any HMRC investigation

Translation: "Put it through. Chances are HMRC will never look into it and I will get away with it."

If what she is putting through is grey area stuff, that's arguably ok. If it's absolutely not ok, you need to consider your MLR obligations and whether to continue to act.

Rachel

Thanks Monsoon.

I am trying to weigh it up in my head at the moment as I am uncomfortable with it.

Basically I am being told to put through 50% mortagage (it is interest only) and 40% electricity and 40% gas after having pointed out all the guidelines and being ignored. There is no rental agreement and the office is a room in the garden.

Obviously, this income needs to be shown on self assessment but as there are expenses to match it will just net off.

Losses this year are already higher than profits last year (3 year of trading) but it is the continuation of carrying this forward that worries me.

Am I wrong? This is the point I hate not having collegues.

Monsoon

I take it she's got a Ltd?

At least make sure you charge extra for doing the rental pages on her SATR!

Does she use half the house for business full time? If she doesn't, then 50% is wrong. If she can justify it - if she looks you in the eye and says "I used half my house for business" then if you feel ok with it, all we are doing is preparing accounts and returns "on the basis of the explanations and information supplied by the client."

If the figures are as disparate as you say, she will likely be flagged for investigation.

Put your advice in writing. Above everything else, do this. If it comes back to bite her, you want it to bite her only and not you as well.

It's a tricky one. It's not nice to have to get rid of clients, but if I was to get someone who insisted on far higher expenses than was reasonable, i.e. if she admits she is chancing it, I'm not sure how I would handle it. I would like to think I would say something like this:

"You have said you use one room out of five. Because of this, you cannot claim 50% of household expenses, as it is not presenting a true and fair view of your costs. I cannot put my name to a return that contains incorrect figures, and so if you want me to submit this for you, I will have to use figures that I believe are true and fair."

Put more bluntly, overstating expenses is tax evasion.

You do not want to be on HMRC's radar as an agent who submits dodgy returns.

There is nothing wrong with making a loss (and you can carry it back 1 year I think, and carry the remainder forward) but there is everything wrong with artifically/fraudulently creating a loss, or a larger loss.

If she's a bad'un, you are honestly better off without clients like that.

Rachel

Thanks

She is a Ltd, she has made it clear that she works from an office in her garden so not even part of the house however could have been purchased like that and therefore mortgage does cover it. However, 50% is excessive and uncomfortable, I am going to write again to get it more realistic and from there . . .

This may sound sexist but I have only had 2 women clients and I have already had to sack one and now this one is close. Men seem to do as they are told!

Paul C

"Men seem to do as they are told! "

And even when we do we still get in trouble! We can't win either way ;-)

Rachel

Hmmm well it hasn't gone down very well with my client at all.
She believes I have accused her of being dishonest and I should not question her expenses. I did question who she had business lunches with to see if they were entertaining or subsistance.
She has agreed to follow the guidelines re use of home albeit disgruntled. I feel a little bit like she is trying to bully me but I am not going to do anything I am uncomfortable with. Maybe I will lose a client, but I picked up another 2 this week on referrals so oh well.
Thanks for your support Monsoon and everyone for their help.

Gem7321

Good for you Rachel