What can be claimed as mileage when self employed?

evosy1978

Hy all

Im a sub-contractor who gets subcontracted by a refurbishment company to a social housing maintenance company? I have to drive every morning 75 miles to the office of the social housing company and then Im given my 2 postcodes to go and plaster. They may be about 3 or 4 miles away max..

Am I entitled to claim mileages expenses on the total day including the 150 mile round trip.

Thanks

taxing

Hmmm

That's a good one.

As you are self employed you will need to establish, for HMRC, where your work base is.

You will argue that as you have an office (and staff...does your partner do the books etc for you and at this 'office, for instance?) and receive business calls at that office; and keep your tools & equipment there; and issue invoices from that business address etc, then as that is your business centre work travel starts when you leave that office (which, no doubt, is your home!).

HMRC will argue that you are site based and that your self employment doesn't start til you get on site.

At the very least, the extra few miles you travel after being given instructions on where to head to will be claimable - easiest is to use the 45p per mile rate up to 10,000 miles in the tax year and 25p thereafter. (The rate renews every tax year).

I would go for broke and claim it all as business mileage.

Thought - can they not phone instructions to you saving a trip to their premises? Do they pay you for the travel time? Won't change the outcome - just curious. Seems they have the cards stacked in their favour but maybe there is no local work so you have to travel further (which would help your case....).

Regards

evosy1978

Thanks for the reply.

I do do all my paperwork and anything like that at home in a small study room. I keep tools in my own garage overnight. Your point about getting phoned through the details does actually happen quite often as sometimes due to heavy traffic, Ill be running late in the mornings. I dont have to travel this far everyday, but your right I do have to go where the work is.

As for recording this type of information, is it ok just to put the town name or do I have to record every street name I go to aswell?

Thanks

chrismac1

There have been a lot of cases on this over the past few years, largely due to the plain and simple fact that ever increasing numbers of people in the construction industry need to travel ever-increasing distances to find work. You have my sympathy. In terms of getting your case for claiming the mileage as robust as possible, the Court cases have turned on just how much of a base your home really is. For example, in one case - sorry can't remember the name - the Tribunal seemed to be swayed by the fact that the guy was preparing his estimates and sending out his quotes from home on his letterhead with his home address on it.

Now it may be that as things stand the balance is against you and the Contractor is currently doing a lot of the admin. on their letterhead. But it's possible that with a bit of arm-twisting they might move the goalposts a bit and permit your home base to have a bit more visibility. If they are a CIS Contractor in this operation - deducting 20% from you - and they SHOULD be, they are almost certain to have had a few brushes with HMRC down the years. So they are likely to be amenable to doing a few things which helps keep HMRC at bay from you, which in turn helps keep them off their backs too. It's worth a try anyway, it's the sort of thing I do for clients on their behalf "I am the accountant of plasterer X, here is a potential win-win for both of you....."

nexus2011

You drive to the office of the social housing so that will be classed as a permanent base of work so you will find it very difficult to claim anything.

chrismac1

You make my point, nexus2011. How hard can it be for social housing to give the taxpayer the 2 postcodes BEFORE he sets off, or whilst he is in transit - via text to the mobile phone for example? This should be no skin off their nose 9 times out of 10. Suddenly the OP is driving directly to the customers most mornings, with perhaps the occasional trip to head office to touch base. If I were to ring up the Contractor, my thrust would be that by making a few small changes the OP's right to claim self-employed status as opposed to employee status becomes easier to defend, which in turn protects the Contractor from being hit with a PAYE and NI deductions bill. So it's a win-win, most folk - even in Construction - can see that.

Ark_Welder

Irrispective of whether the OP is phoned first with the addresses of the sites and does not need to go into the local office, would not the 24-month rule still apply? I don't know whether this is different for the construction insdustry or not... (Does Refurbishment come under Construction??)

HMRC Form 480: Expenses and benefits
HMRC Form 490: Travel expenses guidance

evosy1978

My contractor pays me and deducts my tax aswell. Thats all I have to do with him. I get my addresses from the housing builder but as far as the tax man is concerned I get my addresses the night before.. The contractor meanwhile is probably sat at home enjoying the money I earn him.

I going to start recording all my mileage from now on and ill back track to April this year,

Will I have to record every street name and the exact mile to the decimal???
Would the tax man make contact with the housing builder to clarify everything?

thanks

chrismac1

No not every mile. In practice you are going to have above average mileage claims by the sounds of it. So long as the mileage broadly ties up with your sales invoices and work schedule - i.e. the locations of the jobs - you should be all right on this score should you be inspected. A much bigger issue is whether you are OK to say your home is truly your base. Unfortunately for you, the sector you are in is the most likely of all to get a visit. I advise all my CIS clients to take out fee protection insurance for this reason, so long as they are filing on time (otherwise the insurance is invalid).

In my experience the record-keeping and general attitude of the average CIS sub-contractor leaves a lot to be desired, hence they have their own little - very onerous - tax system all to themselves. I've got a couple of CIS clients who were inspected and given the all clear before they switched to me, I very much doubt they'll have another visit for ages as both are very diligent and keep excellent records, file on time, etc.

I strongly recommend all CIS self-employed folks reading this to do likewise!

evosy1978

Thanks

Im getting everything up to scratch as were hoping to go for a mortgage. Ive always done my online self assessments as I "thought" it was pretty straightforward. I read earlier that you cant just change to the mileage option just you because it suits you, but luckily Ive bought a van in april so am I right in thinking I can this year.???

More advice needed.....
The previous years Ive just put all receipts in for deisil mot tax etc. I bought a van 3 years ago and put the full price in the capital allowance box for that year...... (I "now" know this is a mistake) What can I do about this mistake... I also put another amount in the capital allowance box the following year for some tools. (another mistake).

I wish I had known about the mileage option 3 years.. It would of been a financially better option than the receipts... I also wish I had got an accountant,..... (dont lecture me as girlfriend already has:o)

So what can I do about these 2 errors,?

When all this is done, the accounts are going to go to an accountant so I can get it checked and certified ready for a mortgage lender..... I just want to get everything in order first..

thanks

chrismac1

You can elect to claim capital allowances or mileage on each vehicle. I'd suggest getting the accountant to sort out this year's, then "sense check" the previous years for material errors. Much depends on what you did with the disposal proceeds or trade in on the old van. Having said that, a decent accountant will probably identify things you could have claimed but have not. Overall a pragmatic approach would be to have a list of all the errors at the ready - provided the total tax involved was not large, in which case you should disclose it now - and in the unlikely event of an enquiry (which can start at any point in the next 3 years as they can go back 6 unless there is fraud involved) you make a full disclosure of everything you know about, which has the merit of forcing HMRC to apply minimal penalties unless they themselves find something else you should have known about and had not disclosed.