expense-split

---
name: expense-split
description: Turns your receipts, supplier invoices, bank statement export and mileage log into a written allowable or disallowable decision for every single cost: the wholly and exclusively test applied line by line, business entertainment separated out and permanently disallowed, staff entertaining tested against the incidental guests rule, the GBP 150 per head annual function exemption checked as a separate question from deductibility, dual purpose costs apportioned only where a definite business only part exists, simplified expenses flat rates applied where elected instead of actual cost, an evidence register naming the receipt behind every figure, a borderline register for the genuinely unclear lines, and a gaps list. Use when you are reviewing what a card statement or a pile of receipts can actually go through as a business expense, before a return is filed or a bookkeeper enters a category from memory.
---

# Every cost on the statement sorted into allowed, blocked by name, or needing a note, with the rule behind each one

You give this your receipts, supplier invoices, the business bank and card statement export, and your mileage log or home working hours if you use the flat rate method. You get back a line by line decision built from the wholly and exclusively test in the Taxes Acts: allowable in full, allowable in part with the apportionment method shown, or disallowed under one of the specific statutory blocks that apply whatever the purpose was, principally business entertainment. It will not decide a genuinely unclear line for you. Where the facts you supply leave real doubt about whether an expense was for the trade, it is recorded in a borderline register with the statutory hook and the question for your accountant, because a confident wrong answer on a repeated weekly cost compounds every time it is entered the same way again.

## What it does

1. **Enumerate every cost from the document that actually paid it, not from the category a card statement guessed.** Pull every receipt, supplier invoice, the bank and card statement export, and the mileage log or home working hours record. For each line record the payee, the date, the amount, the description exactly as invoiced, and any note already held about who was present or what the cost was for. A card statement line reading "restaurant, GBP 84" and a receipt itemising two covers, a bottle of wine and a supplier's name are different starting points for the same payment, and the receipt is the one this skill works from.

2. **Apply the wholly and exclusively test first, because everything else assumes the answer.** The statutory rule sits in section 34 of the Income Tax (Trading and Other Income) Act 2005 for a sole trader or partnership, and section 54 of the Corporation Tax Act 2009 for a company: no deduction is allowed for expenditure "unless it is incurred wholly and exclusively for the purposes of the trade, profession or vocation." HMRC's own Business Income Manual states the practical effect without softening it: "the rule is only satisfied if the taxpayer's sole purpose for incurring the expense is for the purposes of their trade." Where an expense genuinely serves two purposes, one business and one private, the manual is explicit about the default result: "If one of the reasons is not for business purposes, the expenditure fails the statutory test and there is no provision that allows a 'business' proportion." The whole cost fails, not half of it, unless step 7 applies.

3. **Pull out business entertainment and disallow it by name, regardless of purpose.** Client entertaining is not tested against wholly and exclusively at all, because a separate statutory block removes it outright: section 46 of ITTOIA 2005 for the self-employed and section 1299 of the Corporation Tax Act 2009 for companies. Taking a supplier or a customer for a meal is disallowed even where it plainly was for the purposes of the trade, and no apportionment rescues any part of it. This is the single most common miscoding on a hospitality business's own card statement, because the venue that spends every working day feeding other people's customers routinely also pays for a meal for its own guests, and that cost sits in a different category from every other cost on the list.

4. **Test staff entertaining separately, using the incidental guests rule, not the venue.** Feeding staff is not automatically caught by the entertainment block. The manual's own test decides it: "whether the employer would have paid for the event if there had been no guests present. If the employer would not have paid, then the event is business entertainment and the entertainment of the employee is incidental to this." A staff meal in the course of a shift is allowable. A staff member's meal at a table the business booked to entertain a supplier is not, because the staff member's presence is incidental to the entertaining, not the reason for the cost.

5. **Check the GBP 150 per head annual function exemption as a separate question from deductibility, and note it rather than mixing it into the expense line.** This is not a rule about whether the cost is an allowable business expense at all; a staff Christmas party is ordinarily allowable staff entertaining under step 4. It is a rule about whether the cost becomes a taxable benefit on the employees who attended. The exemption applies where the event is "open to all your employees", is "annual, such as a Christmas party or summer barbecue", and costs "GBP 150 or less per person." Breach any one of the three conditions, most often the per head figure once wine and a venue hire charge are added in, and the whole amount becomes reportable on form P11D with Class 1A National Insurance due on it, not just the excess over GBP 150. Record the per head cost worked out from the actual headcount that attended, and flag it the moment it is close to the line rather than after the invoice is paid.

6. **Apply simplified expenses flat rates only where the owner has elected to use them, and use the rate in force on the date of the journey or the month worked.** For vehicles, the flat rate for the 2026 to 2027 tax year is 55 pence per mile for the first 10,000 business miles and 25 pence per mile after that for cars and goods vehicles, and 24 pence per mile for motorcycles; the rate for cars and goods vehicles was 45 pence per mile before 6 April 2026, so a mileage log spanning that date needs the miles split either side of it. For working from home, the flat rate is GBP 10 a month for 25 to 50 hours of business use, GBP 18 a month for 51 to 100 hours, and GBP 26 a month for 101 hours or more. Once flat rates are used for a given vehicle, they must be used for that vehicle for as long as it is used in the business, and flat rates cannot be claimed on a vehicle already claimed through capital allowances.

7. **Apportion a dual purpose cost only where a definite, identifiable business only part exists, and record the method.** The manual draws this line precisely: apportionment is available where "a definite part or proportion of an expense has been laid out or expended wholly and exclusively for the purposes of the trade", such as a phone bill split by the proportion of calls that are business calls, or household running costs split by the rooms and hours used for business rather than living space. This is a different question from step 2's dual purpose failure: step 2 is a single cost with one indivisible purpose that happens to be mixed, step 7 is a cost that can genuinely be cut into a business slice and a private slice with a stated method. Record which method produced the split and where the input figures came from, because an apportionment with no stated method is a private cost wearing a business percentage.

8. **Build the evidence register as you go.** Against every line, record the receipt or invoice reference and its date, and for anything that is not self evidently business, such as a meal, a gift, or a mixed purpose journey, record who was present or what the cost was for and where that note came from. A repeated weekly cost with no note attached is the pattern a bank statement review misses every time, because it looks the same as the previous nine weeks.

9. **Hand the finished decisions to Codex and let it build the register.** Claude hands over the enumerated line list with, for every line, the allowable or disallowed decision, the statutory hook relied on, the apportionment method and percentage where one applies, whether simplified expenses were used, and the evidence reference. Codex makes no judgement at all: it tabulates what it is given, totals it, and writes anything unanswered into the gaps list. Run it from the folder holding the receipts and statements:

   ```
   codex exec --sandbox danger-full-access --skip-git-repo-check -C "<working folder>" - < CODEX.md
   ```

   What comes back is the expense register, the entertainment and staff function summary, the mileage and home use claim, the evidence register, the borderline register and gaps.md, plus the counts you check in the next section.

10. **Write the borderline register for anything the supplied facts do not settle, and never guess a purpose.** A line is borderline when the payee, the amount and the date are known but the purpose is genuinely unclear from what was supplied, such as a meal with no note of who attended or a purchase that could equally be personal or business use. The honest output is not a decision but a file: the line, the facts, the statutory hook, both readings, and the single question for the owner's accountant. Guessing the more generous answer on a line that recurs weekly is how a small uncertain habit becomes a large disallowed claim at the first enquiry.

## Then it checks

1. Every line enumerated in step 1 appears in the expense register with a decision recorded, and the register row count equals the line count from step 1 with no unexplained difference.
2. Every line coded as business entertainment is marked disallowed in full, with no apportioned or partially allowed row against it.
3. Every line coded as staff entertaining names the incidental guests test result, and any line where non-employee guests were present is checked against that test rather than assumed allowable.
4. Every claim against the GBP 150 per head exemption states the actual headcount and the actual per head cost, and any figure at or above GBP 150 is flagged rather than rounded down.
5. Every mileage claim uses the rate in force on the date of the journey, with journeys either side of 6 April 2026 split and each portion carrying its own rate.
6. Every apportioned line names the method and the percentage, and no line marked disallowed under the wholly and exclusively test in step 2 also carries a partial allowance.

Any check fails: name it, redo that step once. Failed twice: say what is wrong and stop.

## Rules
- Public information only.
- Never invent a fact, a number or a quote.
- Anything sent in someone's name says whose name it is.
- Never state a typical allowable expense ratio, a typical entertainment spend, or what proportion of costs HMRC usually disallows for a single independent UK hospitality business. No published figure exists for one venue, and a borrowed figure invites either an underclaim against a genuine wholly and exclusively cost or a disallowed claim defended by a number that was never this business's own.
- Never apportion a cost that fails the wholly and exclusively test under step 2. Only a cost with a definite, separately identifiable business only part under step 7 is apportioned; everything else is allowed in full or disallowed in full.
- Never decide a genuinely unclear purpose. Record the facts and send it to the borderline register rather than choosing the answer that claims more.
- Never apply a flat rate mileage figure from a previous tax year to a journey made after the rate changed, and never mix flat rate and actual cost methods for the same vehicle in the same year.
- Never treat the GBP 150 per head exemption as a deductibility rule. It answers whether the cost is a taxable benefit on the employee, which is a separate question from whether the business can deduct the cost at all.
- This output is a working document prepared for the owner's own accountant or tax adviser to check before any return is filed. It applies published law and published HMRC guidance to the facts the owner supplied. It is not tax advice, it is not a clearance, and it is not a ruling that any expense shown is correctly treated.

## Built from
- Income Tax (Trading and Other Income) Act 2005, section 34, and Corporation Tax Act 2009, section 54, as summarised and quoted in HM Revenue and Customs, "BIM37007: Wholly and exclusively", https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim37007, read 23 September 2026: the statutory test, the sole purpose principle and the dual purpose default in step 2, and the apportionment exception in step 7.
- HM Revenue and Customs, "Business Income Manual: business entertainment", https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim45034, read 23 September 2026: the statutory disallowance under section 46 ITTOIA 2005 and section 1299 CTA 2009, and the incidental guests test for staff entertaining, in steps 3 and 4.
- HM Revenue and Customs and GOV.UK, "Expenses and benefits: social functions and parties: What's exempt", https://www.gov.uk/expenses-benefits-social-functions-parties/whats-exempt, read 23 September 2026: the GBP 150 per head, annual, open to all employees conditions and the whole amount becoming reportable on breach, in step 5.
- HM Revenue and Customs and GOV.UK, "Expenses if you're self-employed", https://www.gov.uk/expenses-if-youre-self-employed, no date shown on the page, read 23 September 2026: the general allowable expense categories referenced in step 1.
- HM Revenue and Customs and GOV.UK, "Simplified expenses if you're self-employed: vehicles", https://www.gov.uk/simpler-income-tax-simplified-expenses/vehicles, no date shown on the page, read 23 September 2026: the 55 pence and 25 pence per mile rates for the 2026 to 2027 tax year, the 45 pence rate before 6 April 2026, and the motorcycle rate, in step 6.
- HM Revenue and Customs and GOV.UK, "Simplified expenses if you're self-employed: working from home", https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home, no date shown on the page, read 23 September 2026: the GBP 10, GBP 18 and GBP 26 monthly flat rates by hours of business use, in step 6.

# expense-split

## You are given
The enumerated expense list for one UK hospitality business, built from receipts, supplier invoices, the business bank and card statement export, and the mileage log or home working hours record, with the payee, date, amount and description named against every line exactly as invoiced or shown on the statement. Whether the business is a limited company or a sole trader or partnership. For every line, the decision Claude has already reached: allowable in full, disallowed in full, or apportioned, with the statutory hook relied on (wholly and exclusively test, business entertainment block, or staff entertaining exception), the incidental guests test result for anything coded staff entertaining, and the apportionment method and percentage where one applies. For any line checked against the GBP 150 per head annual function exemption, the actual headcount and the actual total cost. Whether simplified expenses flat rates are elected for vehicles or home working, and if so the miles or hours claimed each period with the date they fall on. The evidence reference behind each line, the note of who was present or what the cost was for wherever that was supplied. Every genuinely borderline line marked as such by Claude, with both readings and the question for the accountant already drafted. All judgement calls, including every allow or disallow decision, the apportionment method and which lines are borderline, have already been made and are supplied to you.

## Produce
Write into a `./expense-split-output/` folder:

1. `expense-register.csv` with these columns in this order: `line_ref`, `payee`, `date`, `amount_gbp`, `description_verbatim`, `expense_category`, `decision`, `statutory_hook`, `apportionment_method`, `apportionment_percent`, `allowable_amount_gbp`, `evidence_ref`. `line_ref` is E001 upward. `expense_category` is exactly one of `general business cost`, `business entertainment`, `staff entertaining`, `motor expense`, `home working cost`, `other dual purpose cost`. `decision` is exactly one of `allowable in full`, `disallowed in full`, `apportioned`. `apportionment_method` is exactly one of `stated business use percentage`, `simplified expenses flat rate`, `not applicable`. `allowable_amount_gbp` equals `amount_gbp` where `decision` is `allowable in full`, is `0` where `decision` is `disallowed in full`, and is the apportioned figure where `decision` is `apportioned`.
2. `entertainment-and-functions-register.csv` with columns: `line_ref`, `event_description_verbatim`, `event_date`, `headcount`, `total_cost_gbp`, `cost_per_head_gbp`, `entertainment_type`, `incidental_guests_test_result`, `exemption_conditions_met`, `p11d_reportable`. `entertainment_type` is exactly one of `client entertainment`, `staff entertaining only`, `staff entertaining incidental to client entertainment`. `incidental_guests_test_result` is exactly one of `employer would have paid without guests`, `employer would not have paid without guests`, `not applicable, no non-employee guests`. `exemption_conditions_met` is exactly one of `yes`, `no, cost per head over GBP 150`, `no, not annual`, `no, not open to all employees`, `not tested`. `p11d_reportable` is `yes` or `no`.
3. `mileage-and-home-claim.csv` with columns: `line_ref`, `claim_type`, `period_start_date`, `period_end_date`, `miles_or_hours`, `rate_applied_gbp`, `rate_period_note`, `claim_amount_gbp`. `claim_type` is exactly one of `vehicle mileage`, `home working hours`. `rate_period_note` states which rate table row was used and whether the period straddled 6 April 2026, splitting the row into two if it did.
4. `evidence-register.csv` with columns: `evidence_ref`, `supports_line_ref`, `evidence_type`, `evidence_file_name`, `evidence_date`, `purpose_note`. `evidence_type` is exactly one of `receipt`, `supplier invoice`, `bank or card statement line`, `mileage log entry`, `other document supplied`.
5. `borderline-register.csv` with columns: `line_ref`, `payee`, `amount_gbp`, `facts_summary`, `statutory_hook`, `reading_one`, `reading_two`, `evidence_held`, `question_for_accountant`. One row per line Claude has marked borderline. That row's `decision` cell in `expense-register.csv` reads `borderline, see borderline-register.csv`.
6. `gaps.md` a numbered list of: every line with no decision recorded; every line with no supporting evidence reference; every apportioned line with an empty `apportionment_method` or `apportionment_percent`; every entertainment or function line with no headcount or no cost per head calculated; every mileage or home working claim with no rate period note; and any figure supplied without a date.

## Rules
- Codex tabulates, totals and cross checks only. It never decides whether an expense is allowable, never judges a wholly and exclusively question, never sets an apportionment percentage and never rules on a borderline line. Every one of those was decided before the file reached Codex.
- A line with no supplied decision gets an empty `decision` cell and a line in `gaps.md`. It is never inferred from the payee name or the card statement category.
- Never apportion a line marked `disallowed in full`. A disallowed line has `allowable_amount_gbp` of `0` in every row, with no partial figure recorded anywhere.
- Never apply a mileage or home working flat rate that was not supplied. A rate is taken only from the rate and period Claude has already stated, never calculated or looked up by Codex.
- Never write a typical expense ratio, a typical entertainment spend or any industry benchmark into any file. No such figure exists for a single independent UK hospitality business and none is to be recorded.
- Never carry a decision, a category or an apportionment percentage forward from a previous period's file without it being separately supplied for this period.
- Use British English, GBP written as `GBP` or the pound sign, and DD Month YYYY dates. No em dashes in any file you write, and any supplied text containing one is recorded verbatim and flagged in `gaps.md`.
- Every quoted payee name, description and event description is copied exactly, including its punctuation and capitalisation.
- Every file ends with this line: this is a working document prepared for the owner's own accountant or tax adviser to check before any return is filed. It applies supplied decisions to the supplied facts and is not a ruling that any expense shown is correctly treated.

## Return
The absolute path of every file written, the row count of each CSV, the total allowable amount and the total disallowed amount across the expense register, the count of lines coded business entertainment and their total value, the count of staff function lines that breach the GBP 150 per head exemption with their per head figures, the total mileage and home working claims with the rate periods used, the count of borderline lines, and the `gaps.md` item count.