Training and tax position

**TheFaQQer** · 22 July 2014, 08:36

If you are training to pick up new skills, or skills to support work that you haven't actually got, then it's not a valid business expense.

If you are training to support work that you already have, then it becomes a valid business expense.

**malvolio** · 22 July 2014, 08:54

Originally posted by monoceros View Post

Hi,

I am currently contracting via a ltd company. My work is mainly software architecture and development, but I would like to retrain to bring myself back up to speed on some skills that I used to have (specifically Oracle database performance - which I did for 12 years, but have lapsed in the last 5 years).

My accountant tells me that I cannot pay for this training via the ltd as its not directly in support of the current main business focus, implying that I would need to first get a contract which involves some degree of Oracle performance work. Is this correct? Seems like a catch-22 situation.

Cheers,
Karl.

Not really a Catch-22 though.

YourCo has contracted to deliver a given set of services requiring a given set of skills. If you want to sell a different set of services, requiring different skills, you have to acquire them from someone who has them. If that's not you, then there is no business justification for you to be trained when you can buy those skills elsewhere. Also, the training fails the wholly and exclusively test because your fee-earning business is not Oracle performance management so how can the training be relevant to it? Hence any such training is a BIK.

Nothing to stop you doing the training and nothing stopping YourCo paying for it, just declare the costs on your annual SAR as a BIK. You recover the cost from the higher fees you will then be able to charge.

**monoceros** · 22 July 2014, 09:07

Originally posted by northernladuk

You could try the search as explained in the FAQ because we have discussed training in great detail but +1 to what TF says.

northernlad I did try the search: the first page ranged from "training to lose some fat" to motor boating! On Page 2 there were threads about training in India but not specific to my question. I have to admit I gave up there but going back with my tail between my legs I can see there is an answer on page 3.

**northernladuk** · 22 July 2014, 09:14

Originally posted by monoceros View Post

northernlad I did try the search: the first page ranged from "training to lose some fat" to motor boating! On Page 2 there were threads about training in India but not specific to my question. I have to admit I gave up there but going back with my tail between my legs I can see there is an answer on page 3.

You used the search as shown here?

http://forums.contractoruk.com/welco...uk-forums.html

I get 6800 threads on all this topic...

https://www.google.co.uk/search?q=tr...QCg&gws_rd=ssl

A training course on how to use google won't be claimable but certainly sounds like it would be useful.

**monoceros** · 22 July 2014, 09:18

Hi Malvolio,
Just trying to understand.... where you say "If that's not you, then there is no business justification for you to be trained when you can buy those skills elsewhere." isn't there a business justification that says that I can buy the skills in for £x per day and perhaps gain some profit of £y per day if I charge x+y to my client, but if I gain those skills myself then I can charge the full amount and keep it all within my company?

I am new to contracting and am trying to understand where and why my thinking is fuzzy on this. I am guessing its thinking of myself as an individual rather than a company and coming from a permie world where we never hired in resource and always internally trained.

Cheers,
Karl

**TheFaQQer** · 22 July 2014, 09:29

Originally posted by monoceros View Post

Hi Malvolio,
Just trying to understand.... where you say "If that's not you, then there is no business justification for you to be trained when you can buy those skills elsewhere." isn't there a business justification that says that I can buy the skills in for £x per day and perhaps gain some profit of £y per day if I charge x+y to my client, but if I gain those skills myself then I can charge the full amount and keep it all within my company?

You would only hire someone in if you already had the work and couldn't personally do it. But if you had the work, then you would be able to pay for the training via the company as an expense, because it's something that is wholly for the business.

Originally posted by monoceros View Post

I am new to contracting and am trying to understand where and why my thinking is fuzzy on this. I am guessing its thinking of myself as an individual rather than a company and coming from a permie world where we never hired in resource and always internally trained.

In the permie world, the company already has the work, which is why they train you - so you can go and do that work that they already have. They wouldn't train you and then go looking for work in that market, though.

**malvolio** · 22 July 2014, 09:51

Wot he said...

One of the many things to get your head around when leaving permiedom and joining reality is that you are providing services now, not people. You also must accept the need always to keep You and YourCo completely separated; that's money, work, liabilities and experience. It takes a while for that to sink in: until it does a lot of stuff doesn't appear to make sense, but it invariably does.

**Unix** · 22 July 2014, 10:01

I would put it through the business, it will benefit the business in the future, if we are saying you can;t claim anything unless it has an immediate benefit then how could any company do research and development?

**TheFaQQer** · 22 July 2014, 10:04

Originally posted by Unix View Post

I would put it through the business, it will benefit the business in the future, if we are saying you can;t claim anything unless it has an immediate benefit then how could any company do research and development?

There's a big difference between R&D and training - the HMRC manuals make that pretty clear.

Training and tax position