IT contractor - new kitchen and other possible expenses?

BrokenJetpack

So I'm an IT contractor and I set up a limited company two years ago, VAT registered, and I have a daily rate contract with one company for initially 12 months and it's been renewed a couple of times. I expect this to continue for the coming years with different companies. So the same single customer for 40 hours per week for the duration of the contract.

What I'm struggling with is expenses and what can be claimed.. I've read up on various things like mileage, entertainment, etc. and read in some places all the various things that can be expensed, but to be honest I really don't see many options that I can claim and I'm struggling to get definitive answers on some things. My phone bill is 13 euro per month everything included and I don't pay for broadband.

I have an accountant and I've asked him a couple of questions over email but he tends to reply with accounting jargon that leaves me even more confused 😶

So here are some things I'm curious about. My current contract is with a client in Dublin city centre and I live in Dublin, working from home. I'm from the west of Ireland and work from there sometimes for a couple of weeks at a time. I'm not trying to cheat or pull a fast one, would just like to know what might be allowable and what isn't.

 - The company's registered office is my home address. I need to upgrade my kitchen as it's pretty crap, can this be paid for from company funds, i.e. office renovation or something like that?

 - I don't have a car and need to get one soon, can I buy a company car / van from company funds? Would it be justified if I can work remotely? There's talk of the company bringing people back to the office on the hybrid 2/3 day from home and the remainder in the office.

 - If I go out for a meal say two or three times a month with colleagues, can this be paid for with the company debit card? If so do I just keep the receipts and claim all the expenses at the end of the year? 

 - Can I expense 50% of my electricity bill? If so I didn't do it last year.. can it be claimed retrospectively?

Is there anything else that I'm not seeing? I bought a new phone and good headphones with company funds this year and I'm thinking / hoping they can be expensed as I use them for work, but last year I didn't expense anything and I just think I'm not optimising what I could be legitimately claiming. 

TIA.

I’m no expert here, but in no way could I imagine you could claim for a nice new kitchen in your home. As for the price of a company car to be deducted against tax, I wouldn’t get my hopes up unless it is fundamental to the job. Documented mileage to visit a client company would be tax deductible. I’m sure your accountant can talk to you in relatively plain English if you explain you don’t quite understand what he says.

squeekyduck

Kitchen- not a hope as it's not a company item. It's used outside of business hours and linked to a domestic dwelling. If you had a dedicated business address it could work.

Car - it depends on make, model and if its used for personnel use. You may have to pay benefit in kind. Speak to accountant for more clarity.

You can claim whatever you want, but it is up to your accountant to tell you the tax implications.

Kitchen: CGT on your home.

Car: BIK on you income.

Electricity/Work from home allowance: Maybe, depending on you company structure. Ask your accountant.

Corporate Entertainment (dinner): You may get away with a few of these per year.

Taxes

Everyone has to play within the confines of the rules(applicable tax legislation). However, you can be as creative as you want(in order to achieve optimal results) as long as you stay within those rules. Get yourself a good tax advisor.

Lenar3556

Firstly, you need a good accountant or tax adviser to help you with this, and it’s important, as mistakes can be costly in the future. If the one you have is not helpful, get another.

A few things that come to mind;

1. Working 40 hours for one client, going on several years would not meet the typical revenue tests for a self-employed contractor. I am aware this is common in the IT sector, but it is something which may be subject to a Revenue clamp down in the future. There was a blitz on the construction industry a few years ago, and many ‘contractors’ were deemed to be employees. There were significant tax and contractual implications for the employers. You should take professional advise on this.
2. The limited company you have set up is entirely a separate entity to you as an individual. Any expenses must be ‘wholly, exclusively and necessarily’ incurred in the running of the business. Mobile Phone- should be ok. New kitchen - definitely not. 50% of electricity bill - stretching it 25% would seem more reasonable. A car - yes, but significant BIK tax implications would likely offset any benefit. A van may work. Headphones required for the running of the business should be fine.

BrokenJetpack

https://www.boards.ie/discussion/comment/119741610#Comment_119741610

Hi thanks. On point 1 I'm going through one of the large IT agencies and I bill them every month, and they in turn bill the end client, so it's pretty well locked down in terms of ltd company / employee for the end client. There was a change years ago where agencies insisted on contractors setting up as ltd companies rather than sole traders, and this was specifically to avoid the scenario you mention whereby contractors could claim to be employees if working for the same client for a number of years.

Ok so the new kitchen seems like it'd be a stretch, but maybe a commercial van via the company could be doable. From what I've read BIK on this used to be 5% of the original vehicle cost, but as of the recent budget that's going up to 8%.

Another point I was reading up on was the professional services surcharge. I've always been a software engineer but after doing that for many years I'm morphing towards technical management, and seemingly a management consultant doesn't incur the surcharge. Is it possible to change the description of what the company does to management consultant?