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Tax Fraud - Personal Expenses

As prisoner 18330-424, aka Lord Black of Crossharbour, adjusts to his new life in Coleman Federal Prison, Jeff Harrison, a tax expert with city solicitors Barr Ellison, looks at the circumstances that can turn a business expense into a tax fraud.

The first thing to establish is that it is perfectly legitimate for a director to have, as part of his package, an agreement that the company will pay some of his personal expenses so long as the full value of the total package including expenses and benefits is declared to the Revenue. The company itself will receive tax relief on those expenses and benefits as part of the cost of employing the director.

So far, so good.  However sometimes a certain measure of greed can creep in and there may be a temptation to describe the expense as something quite different, claim the tax relief and not pay any personal tax.

One easy example would be to claim business travel expenses for a family holiday – a clear case of tax fraud and a simple one for the Revenue to spot.

Another, more serious example occurs when a director claims for a non existent business expense, the company claims the tax relief and the director uses the money for his own personal use.

“If you are fortunate enough to work for a company that pays for holidays, home improvements or new furniture, that’s fine because it is lodged against the cost of employing you and the company can reasonably claim the tax relief.  But the director must declare, in full, the value of the benefit otherwise a fraud has been committed,” says Jeff.

“If your company is paying any of your personal expenses,” says Jeff, “Tread very carefully. Otherwise you could find yourself following in the footsteps of Conrad Black.”

 

For further information contact Jeff Harrison.

The information given in this article is of a general nature only and should not be considered as advice applicable to any particular situation for which specific request should be made to us.