Travel costs and contractors

Travel costs and contractors

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Personal service company and director incurs travel costs which I believe are on the boarder line of the  24 month travel rule. If  HMRC challenge the travel costs and find it is not within the 24 months what happens? Is the employee assessed on a taxable benefit for the ordinary commute costs that it relates to along with penalties & interest depending how far it goes back.

Director is adamant it falls within rule? Any views how this should be handled with the director? Get him sign a  letter of rep all travel costs fall within 24 month rule is my thought.

Replies (8)

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By JCresswellTax
24th Nov 2014 17:07

What do you mean Boarder line?

For a start I think you may mean 'borderline'?

But surely they are either caught or not.

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Replying to Tax Dragon:
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By I'msorryIhaven'taclue
24th Nov 2014 21:49

Shades of Grey?

ards wrote:

Get him sign a  letter of rep all travel costs fall within 24 month rule is my thought.

Getting the director's signature to the effect that his representations are true is all very well on say his company accounts, where you are perhaps reliant on his information and explanations. But as JC has pointed out, the 24 month rule is a more black and white affair - either the director is or isn't caught by it.

Surely getting him to sign to the effect that he falls outside of its scope doesn't properly absolve you from investiagting the circumstances more thoroughly, and applying the rules to them so as to allay the doubt / suspicions that you evidently have.

Edit: I've re-read your post, and infer that your client is not keen to pay you to apply the rules to his particular circumstances. If that's the case, then I appreciate your problem. Under such circumstances, I think I would first don my MLR hat.

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By Halex
24th Nov 2014 21:11

How about?

Now for something a little more interesting....how about salary sacrifice  and auto-enrolment, strictly one before the other. Saves the employer money rather than costs.

Has anyone tried it?

 

 

 

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Replying to ImmanuelLieber:
By JCresswellTax
25th Nov 2014 09:10

How about?

Halex wrote:

Now for something a little more interesting....how about salary sacrifice  and auto-enrolment, strictly one before the other. Saves the employer money rather than costs.

Has anyone tried it?

 

 

 

You start your own thread.

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Replying to ireallyshouldknowthisbut:
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By Halex
25th Nov 2014 10:28

Sorry - this seems to have ended up in the wrong thread.

Late night user error.

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Stepurhan
By stepurhan
25th Nov 2014 09:22

Why concerned

It would help if you said why you think there is a problem. It is hard to say which if you is correct if you simply say you and the director have different views without presenting the facts those views are based on.

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By I'msorryIhaven'taclue
25th Nov 2014 09:59

Future Imperfect?

Stepurhan's right... standard law class format needed:

1 Facts of the case

2 Principles of law involved

3 Apply the principles of law to the facts of the case

4 Advice to Protagonist(s)

I suspect the OP's client has got as far as 2 above on a DIY basis, and is selectively applying his own interpretation to 3. OP, If he doesn't want to pay you to apply 3 & 4 then I guess you really shouldn't get sucked in to free of charge discussion with him - nobody can afford to work for free.

I'm going to jump directly to 4:

Advice to OP: report your suspicions under MLR; retire to a safe distance, and wait until the client is forced to instruct you to tackle this issue.

Advice to Client: Wait until HMRC query the matter, then join Aweb and post a long and whinging synopsis on "Any Answers"; leave out the part about how you weren't willing to pay for the advice; sit back and await sympathetic posts from accountants agreeing with you that the OP is a bad egg, telling you how they would have done it better or for free, and advising you to sue the OP. 

 

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Euan's picture
By Euan MacLennan
25th Nov 2014 10:50

The basic rule is that if the director of a personal service company normally works from home, anywhere that he actually works will be regarded as a temporary workplace and the travel costs will therefore be allowable up to the time that:

the contract is extended so that it will run for more than 24 months (which may be much earlier than the end of 24 months), andhe spends more than 40% of his working time there.

Like the other respondents, I don't see this as a grey area - it is one of the most clearly defined rules.

Have a look at Booklet 490 - the examples with names starting with "E" on page 13 cover the basic rule.  Perhaps, if you show them to your client, he might accept your view.

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