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bigduckontax
bigduckontax, Accountant
Category: Tax
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If I personally pay fines attracted by a company of which I

Customer Question

If I personally pay fines attracted by a company of which I am a director for late filing, are these deductable from my personal tax?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
Sorry, they are not. Here is the advice from V G Woodhouse and Co, Chartered Certified Accountants:
'Penalties are not a tax allowable expense in your accounts. For tax purposes they are treated as a fine, not for trade purposes, they should be included in the figures as Statutory Penalties and adjusted out in the tax computation as penalties not tax deductible.'
I am so sorry to have to rain on your parade.
Customer: replied 1 year ago.
Is that true even if they're paid by me on behalf of a company, I note that they are deductible for employers when paid on behalf of an employee
Expert:  bigduckontax replied 1 year ago.
Well, you can recover them from the company, that is perfectly proper. The company cannot use them to reduce their Corporation Tax (CT) exposure. As it is the company's responsibility to file on time it is the company which is liable to the penalty. This is not a situation where the employer (the company) is paying on behalf of the employee (you, directors being employees per se). It is merely a reimbursement to an employee of expenditure made on behalf of the company, a perfectly normal commercial procedure which happens every day all over the country.
Customer: replied 1 year ago.
Hi, the company for which I paid the fines has now been dissolved, so I can't claim it back. My question is, can I apply the fine that I personally paid (I was a director of the company) on behalf of the company (which was the entity owing the fine) as an expense to my personal tax return. I.e. can I reduce the my income for the purposes of self assessment by the amount I paid on behalf of the company? Does that make sense?ThanksSimon
Expert:  bigduckontax replied 1 year ago.
Well it does make sense Simon. I would be inclined to use it to reduce any emoluments paid by the company to you in your declaration on self assessment.
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Customer: replied 1 year ago.
Hi Peter, I submitted a rating. Better just check you received payment as I'm not sure if it's sitting in an escrow of some sort.Kind regards,Simon
Expert:  bigduckontax replied 1 year ago.
Thank you for your support Simon; it's all there!

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