Overseas trip business expense

[dylant]

Hi all -

I run a business here in the UK contracting as a digital/ecommerce consultant. Around 10 years ago I helped my mother start an online store in Australia and now it's a pretty big deal there in it's field, and wins lots of international awards and I get lots of work out of it. It forms the basis of a lot of consultancy work I do as I use it for my reputation etc.

It does however require me to travel quite frequently back to Australia and I'm wondering how I can treat this in terms of tax relief. I'm originally from Australia, so I catch up with a few friends when I go back, but it's not as if its a big holiday for me, and generally when I'm there we have a set list of tasks to complete together, have a few meetings with some other people who are involved, and I see one or more other clients too (I have the odd other Australian client I do work with).

Currently I do not receive any payment from my mother's business (although she's offered so that option is there) as I gain so much else from it as I've already said.

So the big question: can I claim these trips back to Australia as business expenses? Would me actually invoicing her so there's papertrail proof of the gain I get from it make a difference?

Many thanks

 

[Millerd]

You can definitely claim these expenses. I would include the airfare and other any other travelling expenses and then apportion the amount of time you spend in Australia and claim the business portion as an expense.
As far as getting an invoice from your mother I would consider the tax implications for her and for you to decide the amount - it would not necessarily have to be profitable as the visit leads to other business and could then be considered as a marketing/promotion expense. I would always make a detailed summary and have a story for each trip.
Then if it was ever questioned by the tax authority you would have a meaningful summary and story.

 

[dylant]

Thanks for the reply Millerd. Well that's good news! But are you suggesting that I should definitely be invoicing at least some amount? Currently I'm not invoicing as the way it helps my business, secures deals and boosts my profile is payment enough.

 

[Millerd]

It needs to pass a reasonableness test.
If the trip can be justified on the marketing benefits and that’s reasonable then it may not be necessary to invoice.
Also it should be considered in terms of how relative these expenses are to the size of the business. Again reasonableness - try and avoid any red flags!

 

[Chris Ashdown]

Really a case of proving that the income you get from the visit justifies the expence and the travel costs are not excessive

Might be wise to check with HMRC prior to going, I guess your invoices for the work done would give a time breakdown etc with full details

 

[Millerd]

Might be wise to check with HMRC prior to going, I guess your invoices for the work done would give a time breakdown etc with full details

I would not be using the HMRC as a source of guidance. This is an interpretation issue and can differ from office/person to office/person.
Just build a reasonable business case for each trip which can be provided if it is ever queried.