Any views on Subsistence- food expenses?

PayMatters

Umbrella Companies often don't ask for expenses receipts because they have had special approval from HMRC (called a dispensation). HMRC allow it for some expenses where it can often be difficult to get a receipt i.e. buying a sandwich and where the company can prove that the scale rate amount they allow is fair based on invoices they have previously collected.

Diespensations also cut down on admin by allowing Umbrella Companies to omit certain expenses reimbursed off their year-end P11D's.

Most Umbrella Companies allow you to save TAX (PAYE) and National Insurance on part of your earnings by treating part of their payment to the contractor as being a reimbursement of expenses rather than a wage.

In the past some Umbrella Companies have been criticised for abusing the scale rates by actively encouraging all contractors to claim for breakfast, lunch and dinner even though they haven't actually bought them (and probably haven't been to work for the required 10 hour period to claim).

HMRC are keen to clamp down on this but didn't remove the dispensations in the Chancellors recent pre-budget report.

If however in the future if you are with an Umbrella Company who is found to have flouted the rules you could find yourself being chased for unpaid tax if you are unable to substantiate the amounts you claimed.

For this reason to be 100% safe you should only claim for amounts you have spent and ideally keep receipts where possible.

NOTE: An Umbrella Company helps contractors meet the requirements of IR35 by "employing" the contractor. The Umbrella Company is then responsible for invoicing the end client and collecting monies due.

PayMatters

The reason why Umbrella Company workers are treated slightly different from normal employees is because they're deemed to be working off site (at a temporary work place) and therefore can claim for food/travel wheras if you are working at your company premises this wouldn't apply (but could if they sent you to see a client).

Chris2685

Thanks for the info. Blatant advertisement for your website, but useful non-the-less!

stphnstevey

Paymatters your not allowed to advertise your company on this website, see forum rules - please remove your website address and I have reported you to the site

Also, as an umbrella company yourself, I would enourage others to take your advice with a pinch of salt....umbrella companies have caused huge tax problems for contractors when it comes to expenses and dispensations.

PayMatters

Sorry I thought you were allowed you website in your signature?

Savvy_Sue

PayMatters wrote: »

Sorry I thought you were allowed you website in your signature?

err, no ...

If a Board Guide had seen your posts before the Abuse team got to your signature, they might have sent this PM:

LINKS IN SIGNATURES

Hi, Martin’s asked me to post this in these circumstances: Sorry, the only links in signatures are those of the MSE team, the Forum team, Board Guides and links to charity so I need to ask you to remove yours (please see this rule). If you have any questions about this policy please email [EMAIL="%20abuse@moneysavingexpert.com"]abuse@moneysavingexpert.com[/EMAIL].

Welcome to the boards, however ...

pipsqueak2

I am in that fortunate position - could you expand on this for me please

"But its not all dark news. If you are fortunate enough to own a Company outright yourself, then the amount of money & what you can claim for LEGITIMATELY can be substantial and if your wife/husband owns the Company with you, then all the better."

Murphy_The_Cat

pipsqueak2 wrote: »

I am in that fortunate position - could you expand on this for me please

"But its not all dark news. If you are fortunate enough to own a Company outright yourself, then the amount of money & what you can claim for LEGITIMATELY can be substantial and if your wife/husband owns the Company with you, then all the better."

Certainly.

If you don't have a line manager/boss that you need to answer to, you can decide for yourself what is and what isn't justified. YOU (& your wife/husband) can decide when you are are going to have a business meeting to discuss business matters, where you are going to have that meeting and naturally, holding that meeting will incur expenses - how much expenses will depend on the type of meeting that you hold. You could, for example, decide to hold a business meeting tonight to discuss the monthly management accounts, and then afterwards (after your business meeting) have a meal (it could be a KFC, a bar meal, or a restaurant meal). & if someone else attends the businessmeeting with you, & you pick up the tab, then you can claim that part of the bill as expenses as well. As long as it is a LEGITIMATE business meeting and it is an expense that the business incurs LEGITIMATELY, then you can claim what you decide is reasonable. Don't however buy some food from your supermarket to cook at home, as that claim would get thrown out.

What is of paramount importance is that you keep a note of the purpose of the business meeting (discussing management accounts) and the people present.
Then, if HMRC pick you up on your expenses, you have a supporting evidence of your claim.

Of course, the usual caveat of "Don't Take The Pee" still applies

stphnstevey

Thanks Murphy

So as I am a husband and wife Ltd, that monthly meal out could be a business meeting? and a meal at a business meeting is perfectly claimable expense?

Murphy_The_Cat

stphnstevey wrote: »

Thanks Murphy

So as I am a husband and wife Ltd, that monthly meal out could be a business meeting? and a meal at a business meeting is perfectly claimable expense?

Absolutely -- the big word is that the meeting is LEGITIMATE.
It can work especially well for meetings with clients/prospects/customers.

For example, you may find that a clients/prospects/customer a long way away from you can only see you at a certain time, perhaps late on a Friday afternoon and to see that person, it will mean an overnight stay for you somewhere - perhaps in a rather nice hotel, with a good meal to finish off with. Of course, your customer/prospect does not have to eat with you.

but don't take the pee.