Expenses - don't push your luck!

Last month we looked at what is a legitimate expense for a business owner to claim. This month - thanks to the HMRC - we can reveal the most optimistic expenses attempts submitted last year. Get ready for a giggle...

You work hard all year round. Your company is doing well. You're positive about the future. Surely it's time to reward yourself?

Go for it. Just don't try to put your exotic holiday, luxury watch or Friday night out clubbing on the company credit card.

HM Revenue and Custom (HMRC) recently published a list of the most outlandish expenses that customers tried to claim back on their 2014-15 Self Assessment returns - and they are enough to make an accountant weep.

So here are my favourite:

  • Holiday flights to the Caribbean
  • Luxury watches as Christmas gifts for staff - from a company with no employees
  • International flights for dental treatment ahead of business meetings
  • Pet food for a Shih Tzu ‘guard dog’
  • Armani jeans as protective clothing for painter and decorator
  • Cost of regular Friday night ‘bonding sessions’ - running into thousands of pounds.
  • Underwear - for personal use
  • A garden shed for private use - plus the costs of the space it takes up in the garden
  • Betting slips
  • Caravan rental for the Easter weekend.

Needless to say, all of the expenses above were rejected.

Ruth Owen, HMRC Director General of Customer Services, said: "Year after year we receive a number of ludicrous expense claims, ranging from international holiday flights to expensive designer clothing, which we would never uphold.

"Why should the honest taxpayer pick up the bill for others? HMRC will only accept those claims which are genuine, such as legitimate travel expenses or the cost of tools for the job."

Don't push your luck

Claiming the occasional posh coffee, meal or electronic purchase as a business expense is seen by many as one of the few "perks" of being self-employed.

But it doesn't pay to push your luck. In fact, it could leave you with a hefty bill.

The current HMRC guidance on Expenses and Benefits is over 130 pages long so does not make for easy reading. And opinion on what can and cannot be claimed as an expense is often divided.

For the best course of action, ask your accountant to look over your expense forms and make sure you are claiming appropriately.