If you have a company and that company pays all your bills, utilities, mortgage, weddings etc. How in particular would that go into the accounts. And more imporantly how would it be treated for tax. Let's take a wedding of say 1 million. What would be the company tax benefit of paying for a wedding ? Can you claim VAT back etc.
Tax treatment of weddings by a company
- Thread starter Bronte
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mandelbrot
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That's a really weird question Bronte!
I presume you're talking about a company whose business is nothing to do with weddings, paying for the wedding of its proprietary director?
In which case the amounts paid on behalf of the director will have to be treated as either salary/BIK or loans to director (bearing in mind the 10% limit for company law purposes), both of which have tax costs for the company and proprietary director. They could probably declare it as a dividend either, but that would probably be very tax inefficient (assuming we're talking about an Irish scenario).
And as the expenditure is not money laid out by the company in the course or furtherance of its business there would be no VAT deductibility either.
In other words, there is no tax benefit to the company of paying for the wedding (nor should there be!) - it would not be treated any differently than if the individual had taken a salary / loan / dividend out of the company to pay for the wedding.
I presume you're talking about a company whose business is nothing to do with weddings, paying for the wedding of its proprietary director?
In which case the amounts paid on behalf of the director will have to be treated as either salary/BIK or loans to director (bearing in mind the 10% limit for company law purposes), both of which have tax costs for the company and proprietary director. They could probably declare it as a dividend either, but that would probably be very tax inefficient (assuming we're talking about an Irish scenario).
And as the expenditure is not money laid out by the company in the course or furtherance of its business there would be no VAT deductibility either.
In other words, there is no tax benefit to the company of paying for the wedding (nor should there be!) - it would not be treated any differently than if the individual had taken a salary / loan / dividend out of the company to pay for the wedding.
Brendan Burgess
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Hi Bronte - first of all congrats on the good news! 
There would be absolutely no benefit in paying for your wedding or anything else through a company.
You can't claim VAT back as the expenditure was not used for business purposes.
All such expenditure should be treated as net pay and grossed up for tax purposes.
It would be a really unwise thing to do as a Revenue audit would be extremely suspicious of it and would probe it extensively.
Don't get involved in loans either - they cause huge problems.
There would be absolutely no benefit in paying for your wedding or anything else through a company.
You can't claim VAT back as the expenditure was not used for business purposes.
All such expenditure should be treated as net pay and grossed up for tax purposes.
It would be a really unwise thing to do as a Revenue audit would be extremely suspicious of it and would probe it extensively.
Don't get involved in loans either - they cause huge problems.
Is this a wind up or an actual serious question?
Simple answer is no you cannot claim VAt back on expenditure that is absolutely nothing to do with the company. Even if it was related VAT is not recoverable on food entertainment hotel costs etc
I wondered about that question too over the weekend when I read that Sean Quins daughter got married lately his company paid for it even the 100K for the wedding cake (maybe I shouldn't read everything that is said in the paper) but I thought does his accountant know something I should know about as my daughter got married this summer and maybe my company could pay for it!!!
Not at all a weird question as Hans has pointed out. You never know what those clever boys in Deloitte/E&Y/KPMG dream up.
You mentioned there about a business being in the business of weddings, like a hotel business, then let's just take a wedding, would that be allowed somehow for tax purposes. Is there any way it can have a tax benefit?
T McGibney
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Please explain?
IMHO, the Quinns didn't take a wage in the usual sense - all expenses were routed through the company and at the year-end, when the P35 returns etc are done up, these expenses are taken into account.
There is absolutely nothing unusual in this at all. It happens in tens-of-thousands of companies across Ireland.
(Btw I'm not an apologist for the Quinns and abhor the recklessness with which they've conducted their (other) affairs)
There is absolutely nothing unusual in this at all. It happens in tens-of-thousands of companies across Ireland.
(Btw I'm not an apologist for the Quinns and abhor the recklessness with which they've conducted their (other) affairs)
How is it normal for a company to pay personal bills? In what way are the expenses taken into account. You mean they are repaid to the company?
mandelbrot
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Ahhhh now I get it, I hadn't heard anything about THAT wedding; I saw a thread about expensive wedding cakes somewhere else here, but that went over my head too!
There's no direct or legitimately obtainable tax benefit, but there would certainly be scope for absorbing some of the costs of one particular wedding into the overall overheads of running the business.
mandelbrot
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It's entirely normal, even more so in the smallest of companies. Remuneration can be in money or money's worth - so if you set up a DD for your ESB from out of your Ltd Co's current account, then this amount will be treated as either a loan to you from the company (but again this has its own set of issues), or more likely be treated as part of your director's salary for the year and PAYE operated accordingly.
T McGibney
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Its not at all normal for a company to routinely pay personal bills, especially when the cumulative amounts involved are substantial. Most companies steer well clear of such messing, although many will have occasional, minor 'personal nature' items that can be accounted for through Directors Current ac or in lieu of net salary payments.
Generally, the ODCE take a dim view of the use of company funds to finance personal lifestyles. If a client company is doing so, their accountant would normally be tempted to put them into the 'nightmare client' or 'ex-client' folders.
Generally, the ODCE take a dim view of the use of company funds to finance personal lifestyles. If a client company is doing so, their accountant would normally be tempted to put them into the 'nightmare client' or 'ex-client' folders.
Would that be considered a gift? We're not talking normal wedding here, where the daughter of a hotel owner absorbs say the catering and drinks cost which wouldn't be a very large figure really. But a wedding costing a million, wouldn't that be more of a gift tax wise.
I hadn't realised it was normal for companies to pay the personal bills and then recoup/deduct etc. That answers my question on the tax treatment.
T McGibney
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Its not normal. See above.
My post crossed with this. I know your'e an accountant McG, I didn't think it was normal either. Very messy. But I guess people in a certain wealth category being a nightmare client to you might be a big money spinner for the large accounting firms. I'd imagine in this scenario they have people full time working on all this.
You mention dim view, but it's not illegal to operate this way.
T McGibney
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Its a bit like driving along the roads on a semi-permanent basis with a glass or two of wine on you. You may be legal (ie under the limit) some of the time but you will invariably drift into illegality (ie over the limit) at least occasionally. And when the law is broken, albeit perhaps unwittlingly, the trouble starts...
That's my post of the day, cheered me up no end. I thought the cake thread funny but you've outdone yourself.
mandelbrot
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One man's normal is another man's nightmare it seems!
I've not worked in practice for a couple of years, but when I did the nominal account with the most activity in some of my small Ltd Co clients was the directors current/loan account..! Guys who had gone from sole trader to Ltd Co and never could wrap their head around the concept that it wasn't still all their own money.
I've not worked in practice for a couple of years, but when I did the nominal account with the most activity in some of my small Ltd Co clients was the directors current/loan account..! Guys who had gone from sole trader to Ltd Co and never could wrap their head around the concept that it wasn't still all their own money.