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Service charge

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18 August 2009
Issue: 4219 / Categories: Forum & Feedback , Income Tax
A director receives a service provided by his company and pays tax on the benefit. If he sells this service on as a sole trader, what ‘cost’ can he allocate against receipts?

My director client receives a service free of charge from his limited company and pays income tax accordingly on this service as a benefit in kind.

However acting as a sole trader he then sells this service to a third party. Can he offset against this sale the unpaid cost but agreed value of the service which has been taxed as a benefit in kind?

Readers’ comments would be welcome.

Query 17 452 – Tax hound

Reply from New Road

A bit more information might help in giving a full answer. Some details such as the nature of the service and the values involved might help us to give advice on the income tax corporation tax and VAT issues involved.

My first comment is why take any risk on having the cost of the service disallowed in the individual’s trading account?

Why not pay the company...

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