Allowable expense staying with family and friends?

Allowable expense staying with family and friends?

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Is there anybody out there who can lend me a hand?

I have a OMB limited company client, who wants to pay £25 per night to stay at his parents house. My client intends paying from his company account and can get an invoice from his parents. He has just started a contract working 100 miles from his home for 3 to 4 days each week. His parents live 20 miles from where he is working. There used to be an allowance for staying at friends and family accommodation, if agreed by HMRC dispensation. He does not have a dispensation. I understand that asking for this allowance under dispensation rules is no longer possible.

He probably would not have taken the contract if he would have had to pay expensive hotel bills or commute each day. To me it seems a reasonable expense and at the same time a great chance to spend time with ma and pa. I have trawled the web looking for answers and saw one on Accountingweb by Steve Kesby (Sole Trader staying with family 2012) which suggested that a sole trader could expense the accommodation if wholly and exclusively for business. Would this also apply to OMB limited companies?

Many thanks to anyone who spends time on this question.

Replies (5)

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By Steve Kesby
09th Jul 2014 23:01

My comments...

... are exactly the same. If the employee incurs actual expenditure obtaining board and lodging from his family in circumstances where the costs of a stay in a hotel, for example, would be allowable, then that actual expenditure can be claimed.

The fact that it's to family is irrelevant, unless it's excessive in amount.

If it's just a fiction thugh, it doesn't work. HMRC will naturally be sceptical, so obtaining evidence that there is actual expenditure is just as important as was discussed in the previous thread, relating to a self-employed individual.

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By Touchcomp
12th Jul 2014 22:26

Many thanks, Steve

I shall make sure the client obtains reasonable evidence - to and fro emails, proof his parents live close by - as he is likely to repeat the expenditure for a number of months.

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By mark24c
13th Jul 2014 03:02

Will his parents report the income?

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By Steve Kesby
13th Jul 2014 10:25

Same comments apply

If the rent a room limit isn't exceeded, there won't be anything to report.

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By Touchcomp
13th Jul 2014 10:49

Informed client of Rent a Room

Thank you, I picked up the Rent a Room advice from Steve's Sole Trader post a few years back and have already made my client aware of the scheme. He can stay 170 nights with his parents within a tax year at £25 per night without a tax charge becoming due, assuming they have no other rent a room income. HMRC helpsheet 223 2013/14 has all the info. The GOV.UK info is here for others who are interested. There don't appear to be any 2014/15 changes.

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