MP’s expenses are once more in the news, it turns out that 9 of them have popped their Amazon Prime subscription onto their expense claim so that the tax payer can pick up the bill.
Some have asserted that it was a mistake and that they fell into the trap of a free trial to save the tax payer the postage cost and then ended up paying the annual subscription. This is a timely excuse as the Chancellor popped a clause into last week’s Spring Budget 2017 which states a Green Paper will be “Developing proposals to protect consumers from facing unexpected payments when a subscription is renewed or when a free trial ends“.
One MP has gone on the record as saying “With the opening of my constituency offices, on a number of occasions equipment was ordered through prime membership offering longitudinal savings on timeous delivery costs.” Others have declined to comment.
Of course the savings from Amazon Prime make sense for a business (or an MP) and could be classified as a business expense if you wholly (or mainly at the time of subscribing) use the service in the course of your business. Perhaps you regularly order supplies from Amazon and Prime represents a saving over and above the cost you’d pay on carriage for each individual order. If you then watch a few movies and The Grand Tour it’s technically not costing you anything but is hard to split the cost between business use and private use.
It’s very similar to paying for an unlimited calls mobile phone contract which you need for your business and then make private calls on the same mobile. In this case the simplest way if you have a limited company is to take the mobile contract out in the company name, in which case you’re allowed to make personal calls without there being a taxable benefit. If the phone is a personal contract it’s still a taxable benefit even if used solely for business. Plus you can’t even claim for the cost of business calls if you’re on an unlimited contract as they’ll have zero cost so there is nothing to claim.
If you’re a sole trader then you need to work out the split between business and personal calls (perhaps over a sample three month period) and claim on your tax return accordingly. This is pretty much also what you should do with Amazon Prime if you use it for both business and personal use, although if you use it for business deliveries and then watch a couple of movies it’s going to be pretty tricky to work out the split. Are there any accountants out there who know the answer?