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Im preparing a dispensation for a client who is a contractor (Ltd Co - 1 man) working away from home in various locations mainly in the UK.

He has a company credit card and uses it for the following:

Train travel

Hotels bills

Food costs

Personal costs which are always allocated to the directors loan account

He also uses the company bank account for personal expenses but these are all allocated to the directors loan account.

He does also pay for some food/drink  say, £50 per month in cash and claim it back via an expenses claim supported by receipts

Occasionally he has some  incidental costs such as parking or tube fares which are not supported by receipts but they are paid on the credit card.

When he travels do I need a dispensation for an overnight allowance for incidentals? (£5 uk, £10 outside UK?) Or can I just use this allowance?

What needs to go on the dispensation and is there a particular way to word this?   I've been told dispensations are great when you get then but  its difficult to get them!  Can anyone assist?

Many thanks


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10th Jan 2013 12:50

I have just done several dispensation applications, for several clients - having put off this seemingly horrendous task for far too long!  I used the online dispensation application, which was incredibly easy.  All the dispensations came back quickly, although I had included PI insurance (which I had previously included on P11Ds for these clients) and a copy of the policy has been requested by HMRC.  So I am not sure whether it is worth including PI insurance in a dispensation application, or indeed whether PI insurance should routinely go on a P11D.

But in all other respects, the online form was very easy to complete and submit, and the response time from HMRC was quite quick.  

I don't think that the £5/£10 incidental expenses allowance goes on the dispensation application and nor does mileage up to the approved limits.

If your client is incurring expenses on meals at a temporary workplace, then you can apply for a daily allowance through the dispensation (although bear in mind that receipts will still need to be kept, to ensure that a meal was purchased).



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By thomas
10th Jan 2013 13:10

I didnt know you could do it online, thank you for that!

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10th Jan 2013 13:50

Nor did I until I found it while searching online for the application form to download.  The link is here if anyone else needs it.

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By tom123
10th Jan 2013 15:45

Great Link

Great link - I have now done ours. Had been put off for a long time (years..)

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10th Jan 2013 20:43

Fantastic, that's in my diary to do on 1 February!

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11th Jan 2013 07:57

Does online application meet your needs though ?

The P11D(X) is very limited

See here

Also, there has been a recent shift in how HMRC are issuing Dispensations, pushing even more risk on to employers. See this article for further info

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11th Jan 2013 14:26

Food for thought...

Optimum PAYE, the links give food for thought.  For a simple, one man band director-owned limited company, claiming mostly expenses for travel to temporary workplace, my thoughts would be:

1) It is easy to fill in the P11DX correctly as there is only a limited range of expenses.  When completing these forms for my clients, I have ensured that I have only ticked the relevant boxes, and that these match the type of expenses my client is actually claiming.

2) Obviously it is difficult for a one man band to sign off his own expenses, so I would always argue to HMRC in this point that I, as the accountant, provide the check on whether expenses are valid.  All expenses are reported to me at least quarterly, and if anything is claimed which is not a legitimate expense, this will be debited to the directors' loan account.

I cannot see how HMRC could have cause for concern in the above instances, and the P11D(X) is certainly a tool that makes my life easier.

For a more complex organisation I would definitely agree that the P11D(X) is far too simplistic.

Does anyone have any recent experience of HMRC disallowing a P11D(X) for incorrect completion or because HMRC considered the company's expense authorisation process to be unsuitable? It would be interesting to hear of any real examples of this.

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By Halex
24th Jan 2013 22:15

Have received partial P11D exemption

Rather than full rejection I received a letter full of questions which turned into a partial exemption. There was a sticking point over telephone for a one-man Ltd Co working partly from home. Perhaps my problem was understanding the questions asked in the letter. I haven't had a problem in the past, but it is a few years since I last applied for a dispensation. The on-line application is easy enough but it may be just the start .


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24th Jan 2013 22:25

Home phone - need licence agreement.

Halex - best way to claim telephone expense (landline) for limited company director is to set up a licence agreement for the company to use part of the home for business use.  The rent paid can also cover mortgage interest, heat and light, home insurance etc. There is lots of advice on this forum about such agreements.  

Itemised business calls can be reimbursed to director for a landline in his own name without need for a P11D, but not any proportion of the line rental - and I can't imagine HMRC being happy to grant a dispensation for line rental in a personal name. My dispensations specifically state that this is not included in the dispensation.

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