❌ Difference #3
Spending... without checking whether it is tax deductible
‘I heard it was tax deductible.’
’A friend who is a company director told me that he had bought a car with his company.’
Many executives make expenditures with the intention of optimising their tax situation.
But the accounting and tax reality is often... quite different.
Why it's important
A poorly prepared decision can have very real consequences:
- ❌ An expense that is not tax deductible, even though the cash has been paid out.
- ❌ Non-recoverable VAT and reduced cash flow.
- ❌ An operation that is supposed to optimise... but ultimately costs you more.
And this for one reason only:
❌ You have not ensured whether the conditions are up to date and relevant to your status.
What we recommend
- 🔎 Never settle for a simple 'I've been told that'
Tax rules change every year through the Finance Act:
- Thresholds, percentages, conditions of application, etc.
- What was valid in 2022 may no longer be valid in 2028.
💡 Before making a binding decision, ask for a reliable source, or even an extract from tax legislation or a tax ruling. You can ask your accountant... or your industry association.
- 🚗 Buying a car: a classic purchase... often poorly planned
« It's for the company. So I'll put it on the expense account, right? '
In actual fact:
- You will pay the full price for the vehicle (including VAT).
- You will not be able to reclaim VAT on the purchase (except in very specific cases).
- And the corporation tax deduction is capped, or even completely excluded for certain models (passenger vehicles).
Outcome:
- Reduced cash flow,
- A virtually zero tax advantage,
- And an accounting asset to manage.
- 💻 Do not be concerned about computer equipment.
Good news: for PCs, printers, or software:
- 📆 The depreciation period is often short (1 to 3 years).
- 📉 Software is now available on a monthly subscription basis, meaning it is 100% tax deductible each month.
💡 All you need to do is organise your subscription management properly so that you don't forget anything.
- 🧾 A lease? Have it reviewed by a specialist solicitor.
A poorly drafted commercial or professional lease agreement may expose your company to contractual pitfalls:
- Vague or unbalanced clauses,
- Potential for excessive increases,
- Complexed lease termination...
💡 Have your lease reviewed by a commercial solicitor.
preferably recommended by your accountant (often a pricing partner).
The investment is minimal... for a major legal risk avoided.
- 📞 Consult your chartered accountant... before the project begins.
A chartered accountant is not a hotline you call in an emergency when it's time to sign. They are often already in a meeting... with the director who anticipated their call.
💡 Discuss your project with them beforehand.
That will give him time:
- To verify the current tax doctrine,
- To gather information,
- To take a strategic look at your situation.
And remember: a good accountant does not know everything all the time. But they know how to research, understand and guide you.
- 🤝 Don't limit yourself to your accountant: surround yourself with smart people.
Sometimes the best advice does not come from the firm, but from your peers.
💡 Join a professional union:
- Legal and tax monitoring,
- Trade fairs,
- Exchanges with other leaders,
- Segmented partners (banks, insurance companies, pension funds, etc.).
No professional union in your field?
Turn to the CPME (Confédération des Petites et Moyennes Entreprises) in your region, which often offers a strong and supportive network.
The expert's tip
✅ A good idea can turn into a very bad move if it is poorly executed.
🛡️ Before signing, validate your decisions with a professional.
📚 And keep up the habit of learning, surrounding yourself with others, and staying up to date.
Do not confuse bar-talk taxation with management strategy. 😉
Your accountant is there to support you... provided you call them in time.