Subsistence costs

Subsistence costs

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I apologise if this is a simple question but I seem to be getting different answers when searching the web.
Can I claim subsistence costs as a cost of my business? I work at home 3-4 days per week and visit customers on the other 1-2. I travel early spend the day there and will often buy breakfast on the way and will usuyally buy lunch for myself (sandwich etc)from a shop near the customers premises. Can I claoim these costs? (I am a sole trader consultant)
Many thanks
JL

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By Ned Ludd
16th Feb 2009 18:10

previous enquiries
a few years back i took on 4 enquiry cases from a previous agent. all were couriers and all had ridiculously high subsistence claims on their returns.

the inspector reduced the claims but did allow around £10 per week for subsistence on the basis that quote "some of the journeys would be to scheduled appointment". that, in the Inspectors opinion was the key fact that determined that some form of claim was allowable.

since tht time i have continued to file returns for couriers with a subsistence deduction and i do specifically note tha fact in additional information.

i have trawled the internet many times in the past but can never find enything to do with the "scheduled appointments" rule

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By User deleted
16th Feb 2009 14:14

I'm with the Hungry Man
I too do make claim for such lunches whilst at a clients for the day.

Not tried the white space disclosure - not sure if it is wise?

A quick question for The Haggis.....do you feel worried, you are being followed by a Hungry Man, beware!!

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By User deleted
13th Feb 2009 13:15

Me first then.....
In relation to the question of we accountants do ourselves, I do claim lunches etc If I am working for a day at a clients.

I am office based 4 days per week but will be at a clients for a day on average once a week.

If I am visiting a client for an hour or two then no I won't claim.

I know I should make sandwhiches as it is cheaper but hey, you only live once!!

and the rest of you???

Jcc

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By thehaggis
11th Feb 2009 21:45

Anon
In your example the worker would appear to be itinerant. It is obvious to most that each case needs to be looked at individually and a decision should be based on the facts. That is how tax law works.

Receipts should be kept unless you are looking at trivial amounts. Civil servants are employees and, like most employees, are bound by the rules laid down by their employer. If an employee makes a claim that they are not entitled to, they can be accused of fraud. Employees will have this in mind when they sign their expenses claim, and the employer will have some risk assessment procedure to ensure compliance with their rules.

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By User deleted
11th Feb 2009 12:56

What do you make of this then?
I have a client who runs a contract cleaning business. He looks after church buildings across the north of England and visits each one on a predetermined day of the week to carry out the cleaning duties and monitor his staff. There is some variation on which building he visits on each day.

Would his journey be classed as "Itinerant" or communting to his normal place of work? I would assume the former rather than the latter.

Also, there was mention on the civil service scheme for subsistence. I assume there would be no need to provide receipts, as is the case for the civil service?

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By User deleted
11th Feb 2009 12:09

What do you all do?
Firstly does anyone else go with the white space note? It seems like a good idea, and by limiting the number of years you can go back - great!

However, If no white space notes have been made previously and some of the subsistence claimed, are your clients not being opened up to a potential enquiry?

Furthermore, what has been agreed between you and your client when the Inspector comes knocking.

I would say the key thing is what do all of you accountnats out there do in your SA returns. There are numerous of you who work from home and may spend the odd day at a clients x miles away and go to the sandwich shop at lunchtime for a bite to eat. What do you do?

The results may be interesting!!

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By thomas34
11th Feb 2009 09:15

As Clear as Mud
I bet you wish you hadn't asked JL!

Dave has both given the correct law as it stands and demonstrated the present unsatisfactory state of affairs.

The two situations where subsistence is allowed have to be interpreted on a case by case basis - a great state of affairs for HMRC as they can raise cash via an enquiry (and go back x years). They've therefore no interest in contributing to a more equitable position.

As I understand it a schedule D taxpayer can drive 30 miles to a customer with a schedule E employee for a day's work. They each have a lunch paid for by the employer - his food is disallowed but his employee's is allowed.

It is my intention to add a white box note to all returns in future which include a subsistence claim. This may restrict any damage to one year should a return be challenged in future - I just wish I'd done this in earlier years.

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By thehaggis
11th Feb 2009 01:19

Master & Servant

Your analysis of an employee's expenses is way wide of the mark.

Pre 1998, travel had to be necessarily incurred. Since the employee has the choice where they lived, travel to the place of work was not necessarily incurred. Travel to another place would strictly be allowed only if they attended their place of work first and then travelled from there, since at that point they were "in the performance of their duties". The Revenue took a pragmatice view and allowed the cost of travel from home the other place, but always deducted the notional cost of home to office - the so called "triangulation rules"

This was changed in 1998 with the introduction of the ordinary commuting concept. All travel is allowable unless it is ordinary commuting. A much simpler approach.

An employee can claim the costs of travel regardless of whether they are reimbursed by the employer. There is no such requirement.

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By Dave Paveley
09th Feb 2009 14:41

Subsistence is allowable.

I tend to advise the 5 mile 5 hour rule too.

HMRC allow subsistence providing either the business is itinerant in nature or for occasional business journeys outside the normal pattern.

See BIM47705.

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By User deleted
09th Feb 2009 13:12

Subsistence costs
The reason why the treatment of subsistence under Schedule D and Schedule E is different, is due to the relationship between the worker and their business.

A schedule D taxpayer has a choice of where he goes to do the work. The location does not really matter if it is at his home, external office or that of a customer. Any choice is purely his own. He has the choice/freedom of whether he accepts the work offered or not, and should set his fee accordingly to cover overheads/profits etc., As the expense for subsistence is required to enable the schedule D worker to live, then duality of purpose must step in and no allowance is due. Subsistence is allowed on a few occasions but this is not the norm.

A schedule E taxpayer has no choice where and when he works. If his employer sends him to work somewhere then he has no choice in the matter. The employer can then pay expenses to the employee to cover those expenses he normally would not have been expected to meet, such as subsistence without any dual purpose restriction. Tax deduction for company for expense and normally no benefit in kind for employee. The employee cannot claim a tax deduction for these expenses if he does not get reimbursement from his employer for the cost. Likewise an employee cannot claim a tax deduction for his lunch at his normal place of work etc.,

In my humble opinion there is no need to change the rules they are adequate as they currently stand.

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By thomas34
09th Feb 2009 10:40

Subsistence
I lost the last fight I had with HMRC on this subject and was told (off the record) that if I appealed to the Commissioners and won, the Revenue would themselves appeal the decision.

They quoted Caillebotte v Quinn and the duality of purpose argument. They do say however that claims will be accepted where the taxpayer's trade or profession is of an itinerant nature - can't remember where I read that I'm afraid. I believe travelling salesmen are in this group. This was referred to in Hansard but the view was that the rules required no further clarification.

Personally I use the Civil Service's own system where nothing within a 5 mile radius is allowed. I also consider the time of absence from the permanent work place - over 5 hours and over 10 hours.

The difference in treatment between Schedule E and Schedule D is in my humble opinion unsustainable in the long term.

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