John Webb
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Subsistence for IT contractor

Subsistence for IT contractor

I have a client (IT consultant Limited Company) who claims home to client site travel and also associated subsistence. He rarely works more than 3 months at any site (pre launch testing work he does so no long term contracts) and every contract he gets approved by QDOS as I had advised previously so IR35 is (as they confirm compliance) not an area of concern.

What has changed though is his eating habits…….

Historically he would claim the off lunch/coffees as that was all he spent – I had asked him and he had always made his own lunch from home.

Recently – last year’s data I have just received – his lunch/subsistence claims have risen dramatically. He now claims every day (yes he has all receipts) and the daily average is £16 (covers breakfast and coffee after he gets off the train, lunch and the odd costa during the day as well.

I have read other posts in the past confirming the if travel is allowable so too is subsistence I am just “concerned” (and probably unnecessarily) as the figure is so high - £3k in 12 months as oppoed £700 the year before!

If anyone who can provide a reassuring “there there no need to worry – just because he has an expensive habit it is not an issue”. I recall an old (probably 15 year ago) HMRC inspection on a client when the inspector said they worked to a £5 rule of thumb – if subsistence was under £5 they ignored it – if over they looked further. Not saying they would find anything or it is right but you know how you always doubt yourself…. !!

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07th Mar 2016 17:55

Probably not
If the contractor was working at a different location each day then this would be ok but being at the same location for three months he would have great difficulty in persuading HMRC that this was necessary expenditure in order to fulfil the contract. It is necessary to eat to live but this expenditure has a dual purpose and would be disallowed.

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By KH
08th Mar 2016 09:21

Not sure I agree with essex accountant

The trouble is, all subsistence costs have a dual purpose .... food is both entertainment and essential for life, as well as being incurred for business purposes when working away from one's main office/headquarters/place-of-work. My take on this is that if the travel is allowable, then so is the subsistence ... and in this instance cost is not a major item ... now £150 for an evening meal for a brickie would be way over the top, but for the queen it would be merely a trifle. When you consider that even in the sticks a coffee costs at least a fiver, then £16 for a day is not much.

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23rd Mar 2016 12:45

This is bollocks

KH wrote:

The trouble is, all subsistence costs have a dual purpose .... food is both entertainment and essential for life, as well as being incurred for business purposes when working away from one's main office/headquarters/place-of-work. My take on this is that if the travel is allowable, then so is the subsistence ... and in this instance cost is not a major item ... now £150 for an evening meal for a brickie would be way over the top, but for the queen it would be merely a trifle. When you consider that even in the sticks a coffee costs at least a fiver, then £16 for a day is not much.

I know for a fact that the Queen never eats trifle.

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08th Mar 2016 11:18

this was the reason.....

For the question in a way. A few hundred quid I was OK with. I have seen the point argued both ways and was always told that if the travel is allowable then so too is the subsistence.

Assuming this chap meets the requirements of temporary workplace (away from main office (home), less than 24 months) then I would assume the travel was claimable and so too the subsistence therefore.

I have seen it argued both ways on this ad other sites so know it is a grey area - or at least one people disagree on.

on the agree camp, as long as his level is not deemed excessive I will accept OK

 

 

 

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23rd Mar 2016 12:41

Interstingly
Was on a course yesterday run by a very well respected lecturer. She was talking about the travel and two year rule and effectively intimated if you are outside of ir35 you are ok (travel) and so by definition the subsistence should follow. Not sure if that affects anything but it reassures me somewhat!

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23rd Mar 2016 12:48

The first two responses are talking, I think, about the rules for the self-employed, although they have not even got that right.

Follow the advice of the well respected lecturer and the links provided by the chap in a dinghy.

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24th Mar 2016 13:02

Marginally off topic (which was high spend)

Just when you thought it was safe ...

https://www.tolley.co.uk/knowledge-centre/newsletters/employment-tax/mar...

Cases: Case 3

How did that one go pear-shaped?

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24th Mar 2016 13:09

It's an agency worker. Each engagement is treated as a separate workplace, with the effect that the workplace lasts for the duration of the employment, thus making it a permanent workplace.

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