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Keeping it in context

19 June 2013 No Comment

A regular question which we face in our day to day work, is along the lines of “is it an allowable business expense?” And the answer is the accountant’s perennial answer “it depends!”

A little old lady wanders into her local car dealer’s showroom, and tells a salesman that she is planning to buy a white pick up truck. The salesman responds with “I would willingly sell you a white pick up truck, but the truth of the matter is, that we currently have only green pick up trucks and we don’t know when we are going to get some more white ones.” Naturally, being a good salesman, the chap is able to sell the customer a green pick up truck and some 30 minutes later she is driving away with a smile on her face.

The same sort of thing happens a week later. The salesman succeeds in selling another green pick up truck to another customer who wanted a white one.

The data makes it’s way back to head office, and the Sales Director notes “look, we’re selling lots of green pick up trucks, we need to increase the supply of green pick up trucks, now!”

Being a rational human being, you have already worked out that the Sales Director is working on data which is out of context and seems to be drawing the wrong conclusions. It happens!

You are the person who is best placed to understand your business. The rules about allowability of expenses are here. It’s your call – if you can convince the Inspector of Taxes that your business expense is legitimate that’s normally fine by us. However, if we say “it’s not allowable” we are using 25 years of experience and case law to help us.

If you had 10 junior staff, all trying to claim back that questionable expense from your own carefully built up business, would you be happy? What does your business do? Keep your expenses in context!


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