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Self assessment expenses

  • Associate
  • Practice Licence
  • 4 posts
  • # 115237

I have been completing self assessment for clients since I passed my business and personal tax exam.

 

one client has me stumped! 

They live in South Africa and come to the UK to work as a carer. As the travelling expenses were becoming high they decided to purchase a narrow boat. This is solely used when they come to the uk to work, can they claim depreciation on the boats original cost ? Plus living expenses which would include mooring fees, electric, food etc

Would appreciate anyone expertise on this. 

 

Kind regards

Donna

  • Associate
  • Practice Licence
  • 114 posts
  • # 115238

It's a interesting one, and I don't profess to know the answer, but I would have thought the following points relevant in getting closer to it:

1. How long does your client spend in the UK each time they come over to work?

2. How long do they spend it total each year?

3. Do they spend any time working on their boat? (I'm guessing little to none if they are a carer).

4. I'm guessing the boat is replacing hotel accommodation or a short term let rather than the actual travel itself?, which leads me onto

5. Do they let the boat out when they are not in the UK and receive an income from that? 

6. Are they employed by the people they care for or an agency or are they self-employed or through their own company?

7. If applicable, given the above considertaions, how long does each care contract last?

  • Associate
  • Practice Licence
  • 4 posts
  • # 115242

Thank you for your reply Philco

Answers to some of you questions

 

1. Clients spends 8-9 months in the UK working, then goes back to South Africa

2. The boat is basically her accomodation unless she has a client who requires her to live in for a period of time

3. Only time spent working on the boat would be for administration duties, raising invoice colating receipts etc

4. The boat was pruchased to save her accomodation costs whilst working in the UK

5. She does not let the boat out at all when they back home the baot in left in their marina

6. She is self employed

7. Each contract varies just depends on the client, 2 weeks, 2 months etc

 

Also her husband always comes with her and stays on the boat.

Appreciate any help !

 

Thanks again

  • Associate
  • Practice Licence
  • 28 posts
  • # 115273

Hi Donna,

The accomodation expense has not been incurred wholly and exclusively for the purposes of carrying out the trade and therefore is not an allowable business expense. As such, I do not believe you can deduct it for tax purposes.

If the client was required to travel as part of their job and needed to stay somewhere overnight to carry out the work, then it would be deductable. However, from what you are describing, they are simply choosing to work in the UK and the accomodation represents normal living costs.

If you are not sure whether it falls under her trade or not HMRC's Business Income Manual section 21001 covers what is meant by the scope of trade.

You may be able to claim something for use of the home for business purposes for the time that they write up their records, but this will only be a proportion of actual fixed or running costs (time and area basis) or simplified flat rate expenses.

Hope this helps.

Kathryn

  • Associate
  • Practice Licence
  • 114 posts
  • # 115274

I'm inclined to agree with Kathryn.

  • Associate
  • Practice Licence
  • 4 posts
  • # 115277

Hi Kathyn

 

Thank you for your reply, i agree with you and normally I would have said the same.

 

This situsation is an odd one, as previously when the carer was given a new placement in the UK all their travvelling costs and accomodation where deducted as expenses to perform their job.

 

The difference now is that she has purchased this boat to keep her expenses lower, which does seem to be unfair if she is unable to claim back for any of the expense of this. If she wasnt needed to work in the Uk she would not need the boat for accomodation.

Really appreciate everyones comments !

 

Many thanks

 

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