Director of company, claiming expenses for lost income

leitmotif

Hi all,

I was involved in a car accident last month and the other driver's insurer has not contested liability (I was stopped at a zebra crossing, the other party rear-ended me, admitted liability, etc. - open and shut case).

I am claiming for sundry expenses - things such as parking scratch cards. All very reasonable and fairly trifling amounts relative to the sums of money that change hands in these cases.

However, I have missed several hours of work as a result of the admin relating to the accident. I run my own business, and effectively am the business - if I don't work, the company isn't turning over money. That said, because I'm its Director I only pay myself the most I can without having to pay tax. The rest is paid out as dividends (I'm 100% shareholder). So my real income is not the same as my pay. Besides, other than accountancy and IT fees, the majority of my company's expenses relate to percentages of my rent, council tax, bills, etc. So the company's profit is therefore not entirely indicative of my income as I'm benefiting indirectly from a lot more than the profit.

On top of that, what I'm turning over varies. My hourly turnover is probably between €60-€110/hour, which is quite varied. Some days I work 6 hours, some I work 12 hours.

Does anybody have any ideas as to how I go about calculating a reasonable claim for lost income?

terryw

You and the limited company are two different legal entities. You can claim your loss of wages - you can't claim the costs of another legal entity. Probably.

InsideInsurance

The variability of it is going to be an issue. Please take the below as a little playing devils advocate rather than a personal attack

First of all, and very importantly why did you lose 6 hours? Given you dont work full time every day (let alone 24/7) why could those 6 hours not have been done outside of working time?

Given the variability of hours why couldnt those "missed" hours be made up on another day/ time (obviously depending on what your doing this may or may not be a relevant question)

Do you work with one client or multiple? What drives the variability of your hours? Did you cancel work with a client?

lisyloo

I would ask exactly the same question and don't take it the wrong way.
Cars can be dropped off outside working hours, keys can be left in letter boxes.
Emails, letters and often phone calls can be made in evening or lunch hours.

I'm not trying to be nasty, but if your a key worker in the business then it's hard for someone on the outside to understand why you wouldn't do this on evenings, weekends, lunchhours, or shifted your hours some days.

It's atually a lot harder often for low paid workers e.g. checkout workers, to shift their hours as they are required to be "in situ" at certain times of day.

I do understand how frustrating it is and that you shouldn't have to give up a ew hours of you life for free, however what we are trying to put across is how this would look to another party.
If 37.5 hours a week are earning say £50 per hour and 130.5 hours earn £0 per hour, then why is it fair to claim the £50 hours off someone?

leitmotif

Thanks for you replies guys. Nothing taken the wrong way. Your questions raise important points and I'll do my best to respond.

Yes, the company and I are different legal entities, but if I'm not at my desk working neither I nor the company are earning (I translate, and am paid by the word). It's a valid point though.

I should point out I didn't lose six hours. The time I have lost pertains to time spent on the phone to the car rental company and the repair shop. I think I phoned the insurer outside of normal working hours. That said, I can see how one could say that dealing with the admin relating to a car accident is something people would normally do outside of working hours.

I work with several clients. The variability in my hours depends on how much work is being put my way. Sometimes when I've had a 6-hour day and then a load of work is put my way I'll take it and work evenings because I'm keen to maintain a healthy average turnover. So evening time can also be work time, and if I'm spending that on the phone to my insurer or writing claims letters, then that's time that could be spent on work (though admittedly also on anything else).

somethingcorporate

This is just my layman's view:

I think what you've posted is the crux of the matter and something their insurance company it likely to push very hard on.

Unless you can prove you lost work as a result of the car accident (client pulling out etc) it'll be very hard to just say you spent time dealing with an insurance company and as a result lost £60 an hour because it simply isn't true as you could have just done that work a day later.

I think if you are reasonable with your costs then they may allow something here but if you try anything on like this with nothing to back it up then you'll likely get pushed back on this.

It's up to you to prove loss and I think you are going to struggle here.

Good luck!

InsideInsurance

leitmotif wrote: »

Thanks for you replies guys. Nothing taken the wrong way.

Glad to hear it, many before haven't

As has been said, no one works 24 hours a day and it would be damned bad for your health if you did.

If there had been one specific event that had taken up the bulk of the time (eg the car was undrivable after the accident and you had to wait at the roadside for 3 hours for a tow truck and then had to be taken to the garage and then make your way back to the garage to work taking up a total of another 2 hours etc) then it would be worth considering the other issue of your effectively claiming loss of dividends.

On the basis you are talking a few calls here and a couple of emails there etc I think you've a snowballs chance in hell of convincing anyone that you actually turned down work because you needed to call a garage to check the progress of repairs.

Even if you did want to claim that I'd also have to look at why it took 6 hours worth of calls as that is a very very high amount. If its garages of your choosing etc and they messed things up etc hence the extra calls to them and others etc then again I'd be arguing that isnt the TP's fault but your fault in the choice of garage/ hire company or whoever (if the TPI provided all these things then this line of argument against the time wouldnt work)

dacouch

Out of interest, how come you're claiming for parking scratch cards?

BertTheRaccoon

InsideInsurance wrote: »

Glad to hear it, many before haven't

As has been said, no one works 24 hours a day and it would be damned bad for your health if you did.

If there had been one specific event that had taken up the bulk of the time (eg the car was undrivable after the accident and you had to wait at the roadside for 3 hours for a tow truck and then had to be taken to the garage and then make your way back to the garage to work taking up a total of another 2 hours etc) then it would be worth considering the other issue of your effectively claiming loss of dividends.

On the basis you are talking a few calls here and a couple of emails there etc I think you've a snowballs chance in hell of convincing anyone that you actually turned down work because you needed to call a garage to check the progress of repairs.

Even if you did want to claim that I'd also have to look at why it took 6 hours worth of calls as that is a very very high amount. If its garages of your choosing etc and they messed things up etc hence the extra calls to them and others etc then again I'd be arguing that isnt the TP's fault but your fault in the choice of garage/ hire company or whoever (if the TPI provided all these things then this line of argument against the time wouldnt work)

/\This pretty much nails it.

As you are paying yourself a minimal income to avoid paying income tax, your declared salary will be about £5.5k a year, or roughly £100 a week.

I would guess you still paid yourself the usual weekly amount over the affected period, so you would not be able to demonstrate any financial loss. If you did suffer any lost salary, the amount of paperwork you would have to produce would be disproportionate to the sum you are claiming and simply not worth your time.

The third party who caused the accident does not have a duty of care to your company and the company are a separate entity and would not be able to claim any economic loss in this situation.

Chalk it up is my advice

vaio

my OH gets six months full pay when sick and when she got injured in an accident got her normal pay (so no loss of earnings) but her employer got the sick pay refunded by the at fault insurer.

I'm not sure of the mechanism but on the face of it it seems reasonable as my OH shouldn't have to forgo some of her available sick pay and/or her employer shouldn't be out of pocket as the result of someone else's negligence so the sums involved are recoverable as a consequential cost of the accident.

Extending these principle(s) to include lost dividends doesn't seem a huge leap

BertTheRaccoon

vaio wrote: »

my OH gets six months full pay when sick and when she got injured in an accident got her normal pay (so no loss of earnings) but her employer got the sick pay refunded by the at fault insurer.

I'm not sure of the mechanism but on the face of it it seems reasonable as my OH shouldn't have to forgo some of her available sick pay and/or her employer shouldn't be out of pocket as the result of someone else's negligence so the sums involved are recoverable as a consequential cost of the accident.

Extending these principle(s) to include lost dividends doesn't seem a huge leap

The employer can only claw back the sick pay from the party at fault if there is a clause in the employment contract of the injured employee that states the employee has a contractual obligation to recover this money in the event they pursue a claim for their own losses. It's called a subrogation clause.

Most civil servants have such a clause in their contract.