Expenses - finally alloweable, but not backdated

rdpro

Hi,

I've been working under an umbrella company (Brooksons) as a contractor for nigh on 3 years now.

I went back through my paperwork recently and found two things:

1) several months of unclaimed expenses in 2009/10

2) after changing roles to working at a single site in March 2011, I finally found out that it should be treated as 'temporary' and therefore expenses were allowable from the date I started - something that Brooksons originally told me wasn't the case.

(They also gave me conflicting expenses claims info, which I knew was incorrect)


Now I'm sure that somehow I have to claim the previous tax years back directly through HMIT, but I've been told by Brooksons that this probably won't be possible - although their payroll staff say they would deal with it, which they're now denying.

They've also said that they will attempt to offset the entire backdated 'allowance' against my future income, and say they can't backdate any of the allowance to April 2012 i.e., against tax paid already in the current tax year.

As I've had pretty bad advice from them so far, I was hoping someone might be able to clarify where I stand!

Many thanks

(Edit: the reason I'm concerned is that, at current rates of repayment, it will take 70 weeks to work through the back dated expenses, and I sure hope I'll be in a non-contracting job long before that!)

prowla

I think that things are closed off at the end of a tax year, and therefore it is probably right that claims can't be made back into the previous year.

However, you can always take your business elsewhere - the umbrella company is making good money off you, so the question is do they want to see you go.

rdpro

As far as I'm aware, I can back-claim 'allowable expenses' up to 6 tax years - or have the rules changed?

Pretty sure HMIT would be on me like a rash if they found out I'd been in receipt of taxable benefits.

dori2o

You can claim previous years expenses claims going back 4 years from the end of the current tax year.

So in the current tax year, i.e. upto the 5th April 2013, you can make a claim to expenses for the years going back to and including 2008/09.

If your tax is dealt with solely by PAYE, then you can make these claims by printing off a P87 expenses claims forms from the HMRC website, and filling in 1 for each employer for each year.

If you are a self assessment taxpayer and you file your tax return online, you can amend your return onl;ine as long as you do so within 12 months of the due date of the return.

If you don't do SA online, or you are outside of the 12 month timescale for any of the years, you will have to write in to make any amendments.

Pennywise

dori2o wrote: »

You can claim previous years expenses claims going back 4 years from the end of the current tax year.

So in the current tax year, i.e. upto the 5th April 2013, you can make a claim to expenses for the years going back to and including 2008/09.

If your tax is dealt with solely by PAYE, then you can make these claims by printing off a P87 expenses claims forms from the HMRC website, and filling in 1 for each employer for each year.

If you are a self assessment taxpayer and you file your tax return online, you can amend your return onl;ine as long as you do so within 12 months of the due date of the return.

If you don't do SA online, or you are outside of the 12 month timescale for any of the years, you will have to write in to make any amendments.

I think the OP is meaning claiming them via his Brookson umbrella payslips rather than claiming directly from HMRC.

The point is that the umbrella reclassifies income as expenses, and thus there's neither PAYE nor NIC deducted - i.e. it reduces the gross which has the knock on effect of less PAYE and less NIC.

The umbrella never actually "reimburses" the expenses - they just reduce the gross accordingly.

By claiming directly from HMRC, there'll be no relief for the NIC.

rdpro

Pennywise wrote: »

I think the OP is meaning claiming them via his Brookson umbrella payslips rather than claiming directly from HMRC.

The point is that the umbrella reclassifies income as expenses, and thus there's neither PAYE nor NIC deducted - i.e. it reduces the gross which has the knock on effect of less PAYE and less NIC.

The umbrella never actually "reimburses" the expenses - they just reduce the gross accordingly.

By claiming directly from HMRC, there'll be no relief for the NIC.

Ahh, now this explains Brooksons drip-feed of repayment. I had been hoping that, for the current tax year at least, they could offset my previous tax paid against the expenses (i.e., earned £10k to date, paid £2000 tax to date - so reduce 'earned to date' by £X [expenses unclaimed to date], thus creating a tax repayment of £Y )

It looks more likely that I will have to reclaim the previous years of expenses via a P87 direct to the tax office - hopefully it won't take HMIT as long as Brooksons to make the refund