Pushing business expenses...or how to pay no tax?!

srichards

srichards

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After watching programmes about corporations basically cheating their way out of paying a decent amount of tax it set me wondering what ways you could set up a business to basically pay for hobbies or your normal housing costs?

I was wondering if you sold advertising space for example which was permanently displayed on your house could you technically claim all manner of household running costs as legitimate business expenses? Buying things to sell space on would seem taking it a bit far but selling space on property or items you already own might be a possibility.

It really annoys me the likes of google etc pay a paltry percentage of profits as they use al manner of what appears to be underhand ways of doing things. Charging other businesses you own something so magically your profits disappear along with taxes!

This is just a vague notion obviously :)
 
The village that took on the taxman or something similar. That was great. Really showed up the racket for what it is. I wish them luck in highlitimg this farce of a system
 
srichards said:
I was wondering if you sold advertising space for example which was permanently displayed on your house could you technically claim all manner of household running costs as legitimate business expenses?
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I can think of a few problems ...

Planning permission needed if covering more than 0.3 square metres of space with advertising.

What legitimate expenses are there for a section of wall that you could claim back? It won't fall down if you don't pay the electric bill, for example, and I recall when my employer ran the company out of his front room before we got premises, the Inland .revenue (as was) were strict about what proportion of household utilitiy bills could be put through the company accounts and other reports from people running businesses at home suggested that the IR felt that claiming a new dining room table was "office furniture" would not be considered favourably ;)
 
It might work better with something else that would not do the desired function without the maintenance. Perhaps if you sold the advertising space on a vehicle? Then all mileage would be active advertising. All fuel and maintenance costs would be allowable? Could also work with a skateboard but a new wheel is far less of an expense on one and it's harder to calculate the food required to move the skateboard than working out how much fuel you need to move a vehicle :)
 
thing is to claim stuff you still have to earn money for your ltd company so you have to have a ltd company that has an income.
 
Just do something like the big companies do. Open a company in a tax heaven and charge a licensed fee to use the trademarked company name and logo. This is one of many i've heard about.
 
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Big companies exploit the inadequate tax system yes, but they're not doing so underhandedly, it isn't a racket and it isn't illegal.
They're not even devious about it....their financial reports are a matter of public record.
And small business are free to do the same thing if their money people and company structure are smart enough.
 
It pretty much comes down to profits and not making any.
a company can make a lot of profit but spend it on things that reduce its tax burden.

For example buying up assets, buildings, other companies, stock, tools, vehicles.
some large companies like google pay there staff large bonuses out of profits, so the tax burdens move to the individual.

Facebook buy up huge companies with debt and hence that wipes out a large chunk of profits and adds to the value of the company.

There are many ways to reduce a companies tax burden and do very well out of it.

for smaller companies directors stash cash in there directors pension or buy a nice company car.
 
viv1969 said:
Big companies exploit the inadequate tax system yes, but they're not doing so underhandedly, it isn't a racket and it isn't illegal.
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Whilst that's of course true, if a small business set itself up in the way the OP suggests then they would attract a lot of attention from HMRC. They may in fact be doing exactly what larger companies do but a separate set of laws really does seem to apply to smaller companies.

They had a go with IR35 (which applies to small companies and not big ones like Logica) and they are bringing in more rules. E.g. small landlords pay 3% more stamp duty than large landlords.

http://www.telegraph.co.uk/finance/...et-up-as-a-company-and-slash-my-tax-bill.html
 
I'd argue that any expense the OP is considering that is not wholly necessary in the pursuit of the business objects falls in the category of intentionally used to avoid tax. I could be wrong but thought the rules were changed and that even for tax avoidance it does have to have a business purpose.

I would just run you business to make money and have genuine expense to do so. Don't run it to avoid tax. Much better to invest in a pension, maximise isa etc.
 
If you start a business selling advertising space and it brings in money then is that not a legitimate business anyway? If you started up a free paper and distributed that then all those costs - paper, printing and distribution would be fair game. I don't see the difference? It's selling advertising on something else. The something else can move. The something else is circulating the advertising therefore the costs of moving the something else should be included as expenses?
 
srichards said:
If you start a business selling advertising space and it brings in money then is that not a legitimate business anyway? If you started up a free paper and distributed that then all those costs - paper, printing and distribution would be fair game. I don't see the difference? It's selling advertising on something else. The something else can move. The something else is circulating the advertising therefore the costs of moving the something else should be included as expenses?
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And any costs you claim have to be directly connected with the business. It's really quite simple, it might be easy for a multi billion dollar company to jump through the tax loopholes, but you and me really can't afford the legal brainpower.
 
srichards said:
If you start a business selling advertising space and it brings in money then is that not a legitimate business anyway? If you started up a free paper and distributed that then all those costs - paper, printing and distribution would be fair game. I don't see the difference? It's selling advertising on something else. The something else can move. The something else is circulating the advertising therefore the costs of moving the something else should be included as expenses?
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It is if you do it for a genuine purpose. The title of this thread does suggest different. My apologies if I misread that...

But just because your business is selling advertising space, and you whilst working for the business sell your own house for advertising space to the business that you own, for personal gain....Are there truly business expenses involved?

To me it is the same as the villagers wanting tax benefits like a large corporation. As I understand it is rather simple, franchise abroad and truly operate there, that way it is all legit and you can choose where you domicile the corporation. If you don't have international operations, but put constructs in place that suggest you do whilst you don't then you are on dodgy grounds...

In my opinion....
 
Stooping to their level is the only way these loopholes get closed!
 
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If you cover your house in advertising then it may be classed as business premises rather than a house which may cause problems with the local council as well as HMRC.
I am self employed and have an accountant. In my experience the best way I have found is if I am not sure if I can claim something against my business I let my accountant know about it and let her decide. Don't get on the wrong side of HMRC you won't win.
 
HMRC are a right royal PITA!

They do not like admitting mistakes and will often pursue you relentlessly for money you just do not owe

Sorry I know this doesn't help you Suz, it there is a way for you to keep some of your hard earned money from them I say go for it, just be careful though
 
snooks said:
If you cover your house in advertising then it may be classed as business premises rather than a house which may cause problems with the local council as well as HMRC.
I am self employed and have an accountant. In my experience the best way I have found is if I am not sure if I can claim something against my business I let my accountant know about it and let her decide. Don't get on the wrong side of HMRC you won't win.
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You would need to be sure the house does not increase in value as if you sell it there would be cgt to worry about
 
Perhaps advertising on a house is a bad example. Let's stick with advertising on an already owned car/moped/bike Say you sold advertising to local businesses and you mostly tootled around your local area. I'd think after dark mileage wouldn't be allowable for instance.

If you are a sole trader the private/business asset distinction doesn't really exist as you are your business. You wouldn't then have to do any asset transfer?
 
viv1969 said:
Where's the stoop?
They're not doing anything wrong.
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It may not be illegal it is wrong though and it is a scam, its just one they can get away with at the moment.
 
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rjbell said:
It may not be illegal it is wrong though and it is a scam its just one they can get away with.
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Wrong how?
Do you pay more income tax than you're required to, for example?
 
viv1969 said:
Isn't it?
Why?
Why should they pay more in taxes than they are required to?
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It's not paying more than required to it's deceiving and going out of your way to not pay.
 
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It's no exact example you can compare to a personal tax liability. However it's not like me paying more than necessary. More like me buying a house in the caymans so I'm a resident then asking my employer to pay me there while working here. Would that be wrong?
 
rjbell said:
It's not paying more than required to it's deceiving and going out of your way to not pay.
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Where's the deception?
 
Well Starbucks charge UK so much for beans they make no money for a cup. Others charge licence fees to use the brands logo they make no money. Apple and Facebook's double Irish arrangement. The list goes on.
 
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rjbell said:
Well Starbucks charge UK so much for beans they make no money for a cup. Others charge licence fees to use the brands logo they make no money. Apple and Facebook's double Irish arrangement. The list goes on.
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But it's not deception.
You may not like their methods, but that doesn't make it "wrong".
 
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rjbell said:
It's not paying more than required to it's deceiving and going out of your way to not pay.
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No it's playing it by the rules. Have a problem with it? Lobby your MP to change the rules.
 
dejongj said:
No it's playing it by the rules. Have a problem with it? Lobby your MP to change the rules.
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Its not playing by the rules it's making a move that isn't in the rule book then when the rule maker changes the rules and forbids it you change to another move. Its cat and mouse. It's still deceiving but they are clever enough to cover there tracks and hard to prove.
 
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viv1969 said:
But it's not deception.
You may not like their methods, but that doesn't make it "wrong".
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Yes it is. We know that these things do not cost the price they say that cost we can not prove it. They have gone out of there way to deceive hmrc.
 
rjbell said:
Yes it is. We know that these things do not cost the price they say that cost we can not prove it. They have gone out of there way to deceive hmrc.
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We know what they sell it for.
What it costs them, as with any supplier, is much lower.
You think that tin of beans from the supermarket that retails for 50p actually cost the supermarket 50p?
No...it cost a fraction of that. And they don't tell their customers how much.
Why should Starbucks?
It's called making a profit.
Anyone in business who isn't making as much profit as (legally) possible is a poor operator.
 
While it might be within the rules I somehow doubt it or why did Google suddenly decide to pay another £130m? We will never know.

So while it might be legal it doesn't seem very ethical.

Or fair.
 
viv1969 said:
We know what they sell it for.
What it costs them, as with any supplier, is much lower.
You think that tin of beans from the supermarket that retails for 50p actually cost the supermarket 50p?
No...it cost a fraction of that. And they don't tell their customers how much.
Why should Starbucks?
It's called making a profit.
Anyone in business who isn't making as much profit as (legally) possible is a poor operator.
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You must have misunderstood my point. This is Exactly what starbucks do buy coffee from a subsidiary at such a cost that they make no money on a cup.
 
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EdwardL said:
While it might be within the rules I somehow doubt it or why did Google suddenly decide to pay another £130m? We will never know.

So while it might be legal it doesn't seem very ethical.

Or fair.
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The question really is, what did our government give Google in return for the £130m when Google legally had to pay zero tax?
 
KitsuneAndy said:
The question really is, what did our government give Google in return for the £130m when Google legally had to pay zero tax?
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Because it isn't and they know it isn't. They rely on something called a comfort letter a reassurance from a country that they will not look into there scaming tax arrangements. These so called comfort letters are soon to be torn up. Better to cough up the sweetheart deal now than pay what they really owe in the future.
 
rjbell said:
Because it isn't and they know it isn't. They rely on something called a comfort letter a reassurance from a country that they will not look into there scaming tax arrangements. These so called comfort letters are soon to be torn up. Better to cough up the sweetheart deal now than pay what they really owe in the future.
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But it is and the government don't want to change the laws, so it will remain so.

If it wasn't legal, we wouldn't settle for such a paltry amount.

"Guys, the public are annoyed we let you pay zero tax, we need you to make a voluntary payment to stop the complaining for a while so that we don't have to change the tax rules"
 
One of the problems IMO is the top accounting firms working for the big companies are also on the treasury commit advising on tax.
There must be a conflict of interest.
 
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