As I finalise arrangements for my forthcoming finance surgeries at Cockpit Arts studios, it occurred to me that many businesses offer their time, services and/or products for free in order to generate goodwill but how do HM Revenue & Customs view the costs associated with such activity?
Without any legislation written specifically to cover the item of expenditure in point, we must always refer to the default statement that for an expense to be deductible against profits it must be incurred ‘wholly and exclusively for the purposes of the trade’.
HMRC might try to argue that certain pro bono work is not for the purposes of the trade but perhaps for some other private purpose such as improving the future employability of the person or for the person’s own gratification. The latter is particularly pertinent for those unfortunate enough to have a job they love doing!
Provided you have a definite business purpose in mind for the pro bono work you do (and marketing is the most obvious) then all expenses incurred in relation to that work will be an allowable deduction against your profits.
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