Compliance Check

ioscorpio

I have just received a letter from HMRC stating they are checking my SA from 2010-2011 as the info does not match with my employer's info. The difference is the mileage paid by my employer, as they have classed it as income and taxed me on it. I have spoken to the tax office in the past and was told that is was not taxable, so on filling out my SA, I only put the hourly pay as salary and reclaimed the allowable mileage, so received a rebate.

I work for an agency, I have never been to their offices. I travel from home every day to different locations to work for different developers, I was not paid for the first 20 miles and got 28p per mile for the remaider.

I previously worked for another agency doing the same job and did not get taxed on my mileage.

I am currently putting together a letter in response to theirs.

jennifernil

I'm confused by your thinking! I think you may have confused HMRC too.

If you can put some figures on it all, ,maybe someone can work it out.

Can you claim ALL your mileage?

You may have to go with the employer figures, then claim back slightly differently.

ioscorpio

I previously worked for another agency doing the same job and never paid tax and NI on my mileage. All of my mileage is business miles as I do not have a permanent place of work.

The difference of £1970.08 is the total mileage paid

antrobus

ioscorpio wrote: »

I previously worked for another agency doing the same job and never paid tax and NI on my mileage. All of my mileage is business miles as I do not have a permanent place of work.

The difference of £1970.08 is the total mileage paid

Do you have an overarching contract of employment?

ioscorpio

What's an overarching contract of employment?

My contract says "In addition to the hourly rate and holiday pay rate, they will be entitled to receive £... per mile travelling expenses after the first 20 business miles travelled per day". All monies excluding expenses are subject to deductions of PAYE and NI contributions.

jennifernil

So if your contract says expenses are paid without tax etc, how come they are not sticking to that?

jennifernil

ioscorpio wrote: »

I previously worked for another agency doing the same job and never paid tax and NI on my mileage. All of my mileage is business miles as I do not have a permanent place of work.

The difference of £1970.08 is the total mileage paid

So you were paid X amount plus £1970.08, and tax and NI were deducted on the total?

How many miles were you paid for? And, for tax purposes, are you allowed to claim the 20 miles per day as well?

ioscorpio

It's all business miles 11,898, so am allowed to claim for all the miles, so claimed for the difference between 28p and 40p for the miles that I had been paid for and 40p and 25p for the miles that I had not been paid for.

I asked why they are taking tax and NI and was told, they had been told to by the Taxman. That's why I went back to the Taxman myself and confirmed that I should not be paying tax.

jennifernil

Hmmm. Not good, you may have lost the NI unless the employer will sort it for you.

So that your figures agreed with your P60, I think you should have entered the full amount you got (gross), and the total tax deducted.

Then in the expenses claim section claimed relief on the total business miles at the full appropriate rate. So 10000@40p and 1898 @ 25p

ioscorpio

If I do that, when I enter the Allowable Expense inc the mileage paid amount deducted, you are still overpaying on tax as I entered the same fig as my employer for tax deducted.

I have written a letter that I will send tomorrow, so will have to wait and see what they come back with.

antrobus

ioscorpio wrote: »

What's an overarching contract of employment?...

An overarching contract of employment is what you need in order to be able to get tax relief on your travel expenses.

What does it mean? Hang on ....

An overarching contract allows temporary workers to link a series of separate assignments into a single ongoing employment with an umbrella company or employment agency. This allows the umbrella company or employment agency to treat each assignment as a temporary place of work (rather than a permanent place of work). The consequence is that, under the temporary workplace rules, the employer can effectively pay the worker for their travel expenses to such temporary workplaces free of income tax and national insurance.

http://www.legalweeklaw.com/abstract/taxing-tale-temporary-workers-overarching-contracts-5154

Either you've got an overarching contract of employment with the agency or you haven't. I'd suspect, because your agency has classed your mileage as income and taxed you on it, that you haven't. It's also quite possible that your previous agency did have an overarching contract, hence the reason they didn't deduct tax.