Allowable and disallowable

Question 1

If something is disallowable, how should you treat it in a working?

Answer 1

• if it has already been deducted, add it back

- if not, then leave it

Question 2

Is capital expenditure allowable?

Answer 2

No, it is disallowable so should add back.

Repairs are revenue expenditure and are allowable

Question 3

How should the business owner’s salary, drawings, private elements of expenditure and unreasonable payments to family members be treated?

Answer 3

Disallowable, add back

Question 4

How should specific provisions be treated?

Answer 4

allowable

Question 5

How should general provisions be treated?

Answer 5

Disallowable, add back

Question 6

How about the write off of a non-trade debt?

Answer 6

Disallowable as it is non-trade

Question 7

UK client entertaining?

Answer 7

Disallowable

Question 8

Staff entertaining?

Answer 8

Allowable

Question 9

Overseas client entertaining, in the EU and outside?

Answer 9

Both disallowable

Question 10

Gifts to employees?

Answer 10

Allowable

Question 11

Gifts of trade samples?

Answer 11

Allowable

Question 12

Gifts?

Answer 12

Generally disallowable

Question 13

Gifts that advertise the business (not food or drink) and less than £50 each?

Answer 13

Allowable

Question 14

Gifts of food and drink?

Answer 14

Disallowable, except if that is your product

Question 15

Small donations to local charities?

Answer 15

Allowable

Question 16

National charity donations?

Answer 16

Disallowable

Question 17

General subscriptions?

Answer 17

Disallowable

Question 18

Trade subscriptions?

Answer 18

Allowable

Question 19

Fines?

Answer 19

Disallowable, apart from employee parking fines

Question 20

Legal fees to obtain long term debt finance?

Answer 20

Allowable

Question 21

Legal fees to register patents?

Answer 21

Allowable

Question 22

Legal fees to RENEW a short lease?

Answer 22

Allowable

Question 23

Legal fees of capital nature?

Answer 23

Disallowable

Question 24

Interest on late tax payments?

Answer 24

Disallowable

Question 25

Employer pension contribution?

Answer 25

Allowable on paid basis - accruals disallowable

Question 26

Legal fees to GRANT a lease?

Answer 26

Disallowable

Question 27

Sole trader contribution to PPS?

Answer 27

Disallowable, treated as taking profits out of the business

Question 28

Loss/profit on disposal?

Answer 28

Disallowable as it includes depreciation

Question 29

Goodwill impairment?

Answer 29

Disallowable