Coffee machine, home office, allowable expense?

Oh, can the company claim a deduction for putting a coffee machine in Bill's home?

First point: the purchase of plant and machinery is a capital expense, so the purchase cost wouldn't be deductible against the company's income. Instead, the question that should be asked is whether the company could claim a capital allowance in respect of the machine — i.e. deduct the cost of the machine from income over a number of years in installments (specifically, over 8 years in annual instalments of 12.5% of the purchase price of the machine).

I doubt it. Here the "wholly and exclusively" test is relevant; I don't think Revenue will accept that a coffee machine placed in an employee's home will be used wholly and exclusively for the purposes of the trade carried on by the company.

(It does not matter that there is already another coffee machine in the house; there is no reason to assume that those in the home will select which coffee machine to use on the basis of whether the occasion for consuming coffee arises in connection with the company's trade. They are more likely to select whichever coffee machine produces the brew that they find more to their taste.)

It would be different if the coffee machine were installed in a premises that was occupied and used wholly and exclusively for the purposes of the company's trade. And it might be different if the company were installing in an employee's home some item of equipment that, inherently, had an exclusive or predominant business use. (I think Revenue will readily accept a claim for capital allowances in relation to , e.g., computers, scanners, printers, etc, provided to employees for use in working from home, on the thinking that any non-business use will be incidental.)
 
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TomEdison said:
I doubt it. Here the "wholly and exclusively" test is relevant; I don't think Revenue will accept that a coffee machine placed in an employee's home will be used wholly and exclusively for the purposes of the trade carried on by the company.
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The businesses office is registered as the home address, office is locked in the evening. I can't see the issue at all.

Why shouldn't I be allowed to do it?

Broadband, printer ect there's no questions asked.
 
@TomEdison What you're saying is of course very sensible; however, I wouldn't like to be the Inspector at a TAC hearing arguing that one.

If you read the determinations that have been issuing in recent years, if a taxpayer is prepared to go and brazen it out, supported by a written company policy document or similar, then unless the inspector has actual evidence to contradict it, the appeal commissioner will tend to accept the evidence put before them.

I'm not sure whether your point about capital allowances was for my benefit or the general audience, but I was never under the misapprehension that there might be a deduction as a trading expense - I was actually going to point out to the OP that he's talking about a €125 deduction spread across 8 years, but I didn't want to clutter up my own post!
 
Bill90. said:
Why shouldn't I be allowed to do it?
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Oh, you're certainly allowed to do it — no doubt about that. The question is whether you're going to get a capital allowance for doing it.
torblednam said:
I'm not sure whether your point about capital allowances was for my benefit or the general audience,
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Not aimed at you in particiular — for the general audience, and as a corrective to my own earlier post.

In my first post I said that the question of whether the coffee machine would be used wholly and exclusively etc etc didn't arise, because I though we were looking to claim a deduction against the OP's rental income. But you rightly pointed out that, in fact, the issue was whether a deduction could be claimed against the company's trading income. When I revisited the question in that light I realised that "wholly and exclusively" was a relevant factor — but because it's a condition of the availability of capital allowances for wear and tear, rather than because it's a condition of the availabilty of a deduction or an item of revenue expenditure.
I defer to your experience, which I imagine is more extensive than mine. But because this is a matter of capital allowances the test here is not why the expenditure was incurred, but how the machine is used — is it used wholly and exclusively for the purposes of the company's trade? This test must be satisfied in each year in which an allowance is claimed. And not only is this machine in Bill's home, where non-trade-related coffee is presumably regularly drunk, but it's in a home office in which is carried on not only the administration (by Bill) of the company's transport trade but also the administration (also by Bill) of Bill's investment properties. It seems wildly unlikely that Bill will only use the machine for coffees drunk for the purposes of his company's trade.
 
I think that there is a practical issue here as well.
How much tax will you save?

This is the type of expenditure which Revenue would pick up on an audit and even if they let it go, it would make them generally suspicious.

If you are planning to build an office in the back garden costing €50,000, then it might well be worth checking out the best way to do it from a tax point of view. But not a €1,000 coffee machine.
 
Brendan Burgess said:
I hope that this answers your question.
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Some very good point pointed out above. Thanks to everyone for the engagement.

Yes the tax saving is minimal. I suppose "if" i was to buy it myself personally it would cost me €2000 as I'd have to take a salary of €2000 to buy the machine for €1000.

If the company bought it from the company account it's a saving of €1000 plus €125 over 8 years.

So the cost personally is €2000

Or €875 for the company.

I'm will not be buying it personally, and I know just pointing the above out would suggest it's for personal use but I wouldn't dream of paying €1000 to revenue just so I can then go and but a coffee machine for €1000 of which they will have vat on too.

I think I'll brazen it out if need be and argue my point that it's for a workplace office which happens to be registered at the same address as I live.
 
Bill90. said:
I suppose "if" i was to buy it myself personally it would cost me €2000 as I'd have to take a salary of €2000 to buy the machine for €1000.
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I thought that your original plan was to take only c. €30K salary from the company which would presumably mean low rate tax?

Ltd company advice

Hi, would anyone care to add to my below list of pros and cons. Looking at about 30k profits. All lower tax bracket used up. Any tips or advice appreciated.
www.askaboutmoney.com
 
I think your maths are wrong.

Bill90. said:
i was to buy it myself personally it would cost me €2000
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No, it would cost the company €2,000 - as in, it would have pay out €2,000 to give you net income of €1,000 to buy the machine.

If the company buys it, it has to pay out only €875 (net), so it would still have another €1,125 available to pay out to you. But if it did pay that out to you, you'd lose half of it in tax, getting only c. €563.

So, with you buying, you get a coffee machine worth €1,000. With the company buying, you get a coffee machine worth €1,000, plus net pay of €563.

(It doesn't make sense to treat your personal tax liablity as a cost under one option, but to ignore it under the other.)
 
TomEdison said:
(It doesn't make sense to treat your personal tax liablity as a cost under one option, but to ignore it under the other.)
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I'm taking a minimal salary as my rental income has me near the higher rate. So the balance would stay in the company and pay CT on it. It would then be invested in a corporate investment account for the long term.
 
ClubMan said:
I thought that your original plan was to take only c. €30K salary from the company which would presumably mean low rate tax?
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Read that again. 30k profits (within the company) and lower tax credits used up (rental income).

Profits are looking more like 50k Profits and taking minimal salary and investing the rest after all cost's. Keeping enough cash as a safety net of course.
 
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