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Non sales receipt frm customer

A customer has sent me a cheque in payment of an invoice - no problem there. But they have added on an amount for a parking ticket for which they agreed to reimburse me. How do I account for this additional payment?


Posted by Jeremy Bevan on Jul 10, 2012 3:55 PM BST

Hi Jeremy,

A simple approach would be to create another invoice for the amount of the parking ticket, then allocate the invoice payment to both invoices.

Regards,


Posted by Mark McLaren (Solar Accounts) on Jul 10, 2012 4:45 PM BST

hi folks
i hate parking tickets also :-(

i am not sure if parking tickets are an allowable expense or deductable from profits.

does anyone know?


Posted by Lee Larkin on Jul 17, 2012 10:39 PM BST

Hi Lee,

I'm not sure about the tax rules for parking tickets, but I think in Jeremy's case the client has agree to treat the ticket as a re-imbursement.

Regards,


Posted by Mark McLaren (Solar Accounts) on Jul 19, 2012 2:18 PM BST

BIM42515 - Specific deductions: administration: fines
A fine incurred as a result of a trader's infraction of the law is not allowable on the authority of CIR v Alexander von Glehn Ltd [1920] 12TC232, as it is not incurred wholly and exclusively for the purpose of the trade.

Lord Hoffman, in the case of McKnight v Sheppard [1999] 71TC419, noted that the Court of Appeal in the von Glehn case was:

" curiously inarticulate about why the fine was not money expended for the purposes of the trade."

He went on to note that, in his opinion, the reason related to the character of a fine or a penalty:

" Its purpose is to punish the taxpayer and a court may easily conclude that the legislative policy would be diluted if the taxpayer were allowed to share the burden with the rest of the community by a deduction for the purposes of tax."

However, this does not apply to damages that are compensatory, rather than punitive, in character. For example, damages for defamation payable by a newspaper company, where such claims are " a regular and almost unavoidable incident of publishing it".

Where an employer pays fines that are the liability of an employee, so that the employee is assessable on the payment as employment income, the cost to the employer of paying the fines may be allowable in computing his trading profits.

Parking fines
A situation in which an employer pays, or reimburses, a parking fine which is the employee's liability should be dealt with as above. The fine will be the employee's liability if the penalty notice was actually handed to him or her at the time of the offence, or if the employee owns the car. In such circumstances a deduction may be allowed to the employer for the fine paid on behalf of the employee.

But if the notice was fixed to a car owned by the employer, and the employer pays the fine as the registered owner, an employment income charge will not arise to the employee. The fine should then be disallowed in computing the employer's taxable profit. If the employee voluntarily pays a fine in these circumstances, and the employer reimburses it, the employee will be chargeable on the emolument arising. A deduction for the expense may then be allowed to the employer.


Posted by Jack on Jul 27, 2012 6:14 PM BST