We can’t imagine a job at Her Majesty’s Revenue and Customs is always a barrel of laughs, but we’re sure that these outlandish expenses claims must have raised a few smiles around the office when they came in. Although the new tax year is now in full swing, it’s always a good idea to take a look back through some of the weird, hilarious and just downright cheeky expenses claims that self-employed workers have tried to sneak through the tax system over the past few years.
Dress to impress
One painter and decorator claimed for several pairs of Armani jeans, probably a bit fancy for what the tax inspector has in mind when they list “protective clothing” as an allowable expense. A wardrobe of designer dresses was claimed for by one person, who boldly argued that they needed to look their best when meeting clients and that this was “no different to having to spend out on a uniform”. A similar argument was made by another business owner who claimed for Botox treatments. Another taxpayer claimed for two Rolex watches “as Christmas gifts for staff” – despite having no employees. The most amusing clothing-related expenses claims revealed by HMRC, however, are more below-the-belt. One chilly claimant asked for £40 worth of “woolly” undies to be shaved off their tax bill. And another made a rather below-the-belt claim – for a collection of Ann Summers lingerie! Clothing-related expenses are allowable by HMRC, but they must fall into the following three categories: uniforms; protective clothing required for your work; or costumes for actors or entertainers. Everyday clothing is not an allowable expense, even if you wear it for work.
Get away from it all
While HMRC does allow for business-related travel expenses in a variety of categories, some jet-setting taxpayers tried to claim their annual holidays on their tax returns. A family holiday to Nigeria, holiday flights to the Caribbean, and flights to Croatia for dental treatment have all featured in HMRC’s lists of disallowed claims. Spare a thought for the poor man who said his business “stresses me out” and tried to claim for “a decent break to recharge my batteries”: first class plane tickets to Antigua and a fortnight’s stay at a 5* hotel. He was even generous enough to take his wife “as she does a bit of admin for me at home”. Access: denied.
Work-related stress also prompted one tax-returner to pop in a claim for a PlayStation, games and gaming chair, which they argued wouldn’t be needed “if I didn’t have such demanding clients”. Another chancer tried to claim for a music subscription so that they could listen to music while they worked. More impressive, perhaps, is the logic of the carpenter who listed a £900 expenses claim for a 55-inch television and soundbar, which he said would help him price his jobs. These all fail HMRC’s condition that expenses claimed are “wholly and exclusively” for business purposes. While it is possible to claim for tech like computers and printers under HMRC rules, any personal use of such devices must be minimal and incidental.
One swanky heated shed – plus the costs of the space it takes up in the garden – was put forward by one taxpayer, who argued that it would be “cheaper in the long run than hiring a lock-up” to store his business records. This sounds ostentatious, until you hear about the claim for an above-ground swimming pool put in by one business owner: “I needed to relax after a busy year at work, my job was causing me back problems and swimming helps with that. I’ve actually had business meetings in the pool, a few sales leads and so on so doesn’t it count as business development too?” No. No, it doesn’t. For details on what does count as allowable expenses if you work from a home office, take a look at our blog from earlier this year.
So, there you have it – the weird and wonderful world of disallowed expenses. For more information about what are actually legitimate business expenses, you can check out HMRC’s online guide here. You’ll notice there’s no references to betting slips (“I was trying to raise capital for my business”), insurance for a pet Shih Tzu (“I keep records at home and it’s important that they’re guarded properly and Rocky has a really loud bark”) or 226 bottles of energy drink (“It wouldn’t be possible for me to complete my work without them”). There is however, a definitive statement that “you can claim for any insurance policy for your business”, so we can reassure you that your comprehensive, compliant insurance package from Kingsbridge is fully-deductible. If you need to sort your cover, give us a call on 01242 808740.