The Chartered Institute of Taxation (CIOT) has announced that HMRC intend to run a digital campaign aimed at highlighting problems with private use adjustments in respect of business expenses reported via Self Assessment returns.
The campaign seeks to encourage those making private use adjustments to their business expenses to do so accurately.
Following a trial in 2024 involving 600,000 self-assessed individuals who were encouraged to make accurate private use adjustments, HMRC reported widespread inaccurate reporting of disallowable private use.
- The trial generated over £27 million in tax, and HMRC now intend to open more enquiries into private use adjustments for business expense claims.
The CIOT has highlighted that this is a good time to remind clients that expense claims should be restricted to those for business use only and claims should be apportioned correctly based on the circumstances of the particular tax year.
Business expenses must be 'Wholly and exclusively' incurred for the purposes of the business, with any appropriate adjustments being made for private use.
If an incorrect claim has been made, a Disclosure to HMRC can be made via HMRC's online disclosure service. Penalties and interest may apply if HMRC believe the reporting of an incorrect business expense claim was deliberate.
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