travel and subsistence

travel and subsistence

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my client lives in northern ireland but works during the week as self employed consultant at a company based in london.  he travel to and from his accommodation in london every week.  i dont think the cost of travel and accommodation is allowed, is this correct? would it be better to operate as a limtied cpmany and claim staff travel exemption for a short term contract (expected to last less than 24 months)

many thanks

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By david5541
13th Aug 2012 13:49

cost

at the End of the day it is your client who has to decide-is it worth incorporating.

 

any employer can apply for a staff travel dispensation-whether or not a ltd company.. whether you get it as an employer depends on the employer's engagement with with staff and processes-(e.g what sort of travel expense records does he keep)

if the only staff is your client(who is also the employer)the chance of getting a dispenstion is small  and the cost of running a ltd co great

 

me thinks you dont have to apply private use to motor & trvel if he incorporates BUT technically your client will have a benefit in kind and will need to apply for a PAYE dispensation.

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By imbs
13th Aug 2012 14:05

thanks david

so am i right in thinking it is dosallowed if he remains unincorporated sole trader? 

thanks

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By justsotax
13th Aug 2012 14:33

As regards self employed....

it comes down to whether the person is an 'itinerant' worker - may be a struggle in his circumstances, he would need to show his home is his base (he keeps his paperwork, raises invoices, stores his work, uses home as office etc) and the contract is short (perhaps argue in context of the type of work).

 

As an employee a little easier - under 24 mth contract (but home is base still)...although potential to be caught by IR35.....

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Chris M
By mr. mischief
13th Aug 2012 17:36

I would claim this - unless thare are circumstances you've not mentioned - and highlight the risk and tax impact to the client.

The cornerstone of my case for the defence would be the 3 "Olympics" tax cases from 2011 and 2012 in which self-employed contractors of various sorts working at the Olympics (well to be truthful one was in Birmingham) were held to be able to claim these sorts of expenses.

So I would examine the rulings line by line, pick out the ones which favoured my client on one side and the aspects which sisn't on the other.  Then if there is an HMRC challenge you've got the essentials in place for a speedy opening response, or at least an initial helping hand to your tax insurance people if you have that in place.

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By imbs
13th Aug 2012 21:39

ah mr mischief thanks for your advice (and everyone else!).  Good advice from all as usual!

 

 

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By justsotax
13th Aug 2012 21:39

@ mr mischief...
Which cases are those? Thanks

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Chris M
By mr. mischief
14th Aug 2012 06:36

refs
Mellor v CRC 2011 Reed v CRC 2011Kenyon v CRC 2011

There was another one, struggling to find this right now in my notes. 2012 one.

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By thomas34
14th Aug 2012 09:31

Travel & Subsistence

His base appears to be his home i.e. he doesn't have a permanent base elsewhere. Have a look at Tim Healey (the actor) v HMRC TC01940 30.3.12. In his case he was away from home for at least a year. You don't say whether the accommodation is a hotel or a flat/house. If the latter he won't be able to claim meal costs because it is not associated with the accommodation.

 

 

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By adbanks
17th Aug 2012 12:19

Hotel/B&B v Rented

In my freelance days, I was advised categorically by a nice lady from HMRC (shock horror) that hotels and B&Bs could be claimed, but if one rented a house/flat etc then this became your temporary residence and therefore not claimable.

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Replying to Taxed to the limit .:
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By mackthefork
17th Aug 2012 23:13

Not sure, but.....

adbanks wrote:

In my freelance days, I was advised categorically by a nice lady from HMRC (shock horror) that hotels and B&Bs could be claimed, but if one rented a house/flat etc then this became your temporary residence and therefore not claimable.

I would say this is incorrect in principal as you might rent a house for a temporary contract for less than the cost of hotels, likewise with food, providing it was reasonable I can see no difference to buying and cooking your own meals to eating out.  None of this stops you from going home when you would of if you stayed in a hotel (say weekends).  Obviously the circumstances of the contract and other arrangements are important, but to me where you stay is not.

Regards

MtF

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By Chris Smail
17th Aug 2012 13:39

Good old HMRC phone advice

It is a bit sad though. HMRC should either not give any advice or refer people to the correct guidance, mind you the manuals are not always right either.

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By Struggling
09th Oct 2012 22:35

An Umbrella Company is one way to go...

In my freelance days I worked through an Umbrella Company (Parasol Group) who for a reasonable monthly fee made me their PAYE employee for the duration of each contract, deducting Ers NI, Ees NI and tax at source. My home was my base and for any contract < 24 months I could legitimately claim travel and B&B / food. The monthly fee also included liability & indemnity insurance.

This suits the contractor who is working full-time for a sole client for a period, and thus would be caught by IR35 anyway (i.e. pay NI on all taxable earnings), so no disadvantage there.

Of course, with the umbrella company keeping him squeaky clean on NI, tax & expenses, the contractor can do his own tax return without an accountant's help!

.

 

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