Some people do not realise that by charging a non-allowable (for tax) expense, the company bears the full cost. If it is allowable as a deduction for tax, then the company saves 25% (current corporation tax rate) of the expense amount.
Recently, an expose showed all kinds of personal expenses like international airfares, food and hotel expenses were charged into a high-profile company. If the company is owned by all five members of a family and all the expenses were incurred by them, then the expenses borne by the company would be fair enough, though not exactly welcome by any financial controller. If huge sums relating to personal expenses are charged into a company's accounts as of their right of being directors, then the company must have sufficient funds to sustain such outgoings over the years. Having good recurring incomes would help, though not financially wise, because it would mean poor allocation of limited funds which should rightly go into necessary capital expenditure or investment, for example.
If directors' expenses are charged into the company's accounts as a routine because of the use of credit cards issued to the company or paid by it, they can still be adjusted, if deemed personal, by debiting the respective directors' accounts in the company. What I am trying to get at is that if the directors insist on the company bearing all such expenses regardless of whether it is deemed personal and therefore not allowable as tax deductions, then the other shareholders who are not directors (which is common in most companies) would in effect bear their portion of the cost of directors' personal expenses. This is especially unfair where the amounts involved are disproportionate to the company's income.
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