Claiming court expenses - Help required for limited company

quickstepqueen74

My partner had to attend court twice as a witness. We have the expenses form from the court. There are 2 sections which he can complete, the employed or self-employed section. We're not sure which to fill out. We have contacted the CPS for advice but we are still baffled. Has anyone had the following happen and can tell me what they did please?
My partner runs a limited company. Apart from me doing the paperwork, there is only him that works for his company. As he is a director of his limited company, the form (and subsequent email from the CPS) says he has to complete the employed section, showing his loss of earnings. Now, his earnings, I assume are his wages. But, his wages are a set monthly salary which stays the same whether it's a good work month or a bad month . It helps us to budget for our household. We made no deductions to his salary for being at court. However, because he is essentially a one-man-band, unless he works, we have no income. You'd think therefore that we'd fill in the self-employed section, but according to CPS we can't!
Apparently we can only claim for personal loss of earnings and not for losses to his employer. But he is both employee and employer!
There is a final section at the rear of the form for other costs, but they want receipts/proof of that loss. All we could do is supply a copy of the contract that shows his daily rates. Would this really be enough to claim something?
If anyone can offer any advice it would be very much appreciated.
Thankyou in advance.

Sandtree

Being a director of your own company enables you to pay less tax/national insurance than a normal employee would which 99% of the time is fantastic. You have however found one of the scenarios where you fall into the 1% of times. The IR35 regulatory reforms obviously has been trying to put shut on most day rate contractors operating via PSC

He is an employee so needs to fill in the employee section. If he didn't reduce his salary for the days off then he has made no losses so has nothing to claim. Even if he had then I suspect he's doing the usual thing of circa £12,500 per year salary so circa £50 a day.

His company will not make as much profit this year, so in turn you'll receive less dividends, but the company isnt a witness and so it cannot make a claim and dividends aren't covered by court expenses.

The contract is useless because it is between the limited company and his client/agency and the contract only promises a payment to the Ltd not him.

Ultimately a few days lost day rate is going to be tiny in comparison to the tax efficiencies 

walesdave

Sandtree said:

Being a director of your own company enables you to pay less tax/national insurance than a normal employee would

Let me fix this for you.....

Being a director of your own company enables you to pay less tax/national insurance than a normal employee would while not receiving any:
Sick pay
Holiday pay
Pension payments
Workers rights
Job security
Maternity / Paternity leave

and while:
Creating wealth via paying your accountant, IT supplier, financial advisor, local suppliers etc.
Raising revenue for the country via collecting VAT on behalf of HMRC
Paying 20% Corporation tax into the countries coffers
Paying reduced NI but paying dividend tax at 7% initially then rising to 45%
Working your fingers to the bone while trying to grow your company and not go under as you didn't receive ANY covid support

And BTW: Sandtree is right - you're an employee.

Sandtree

walesdave said:

Sandtree said:

Being a director of your own company enables you to pay less tax/national insurance than a normal employee would

Creating wealth via paying your accountant, IT supplier, financial advisor, local suppliers etc.
Raising revenue for the country via collecting VAT on behalf of HMRC
Paying 20% Corporation tax into the countries coffers
Paying reduced NI but paying dividend tax at 7% initially then rising to 45%
Working your fingers to the bone while trying to grow your company and not go under as you didn't receive ANY covid support

And BTW: Sandtree is right - you're an employee.

First of all lets clarify that I am a day rate contractor so fully aware of the benefits and negatives of operating a PSC

Lets put the above into context for you...

You buy supplies but most day rate contractors have proportionally tiny expenses, mine is about 3% and its naturally all tax deductible.

You collect VAT however 99% of contractors are a B2B arrangement and therefore the VAT is recoverable by most clients. In my case this isnt true because my clients revenues are 100% insurance and so they cannot recover VAT but I am the exception not the rule

Yes, pay 20% corporation tax but then this is recognised in part with my personal taxation.

Reduced NI yes, Dividend tax is obscuring the fact you aren't paying income tax. If I were via an umbrella rather than PSC I'd be an additional rate tax payer on 45% and would have no tax free allowance. My accountant is faiely risk adverse but I know plenty of guys where not only do they have their tax free allowance but exit money via wives/husbands etc so rather than £0 tax free allowance they'd get paid directly they get £25,000 


With IR35 rules I've done what many have done and asked their accountant how much I'd need to charge on an inside basis to keep the same take home pay and its about 25% more so I could do a 4 week now and earn the same thanks to the tax advantages as a 5 day week as an inside contractor... 48 weeks a year of working generally... the tax advantages over a year (let alone several) clearly makes up for missing a couple of days... a month of work more than covers it.

And thats me... know other chaps who are more tax aggressive, phoenix their company etc and so need 40% more money as an employee to get the same take-home

quickstepqueen74

Thankyou for your advice /opinions. I wish we weren't a limited company at times like these. Seems there are a few cracks we fall into. But without it,  we'd lose our biggest client,  and as our business is fairly niche we can't afford to lose them. I guess we'll have to suck it up. (Just hurts when after going to court to give evidence, on both occasions it got adjourned and then after losing those 2 days work we got a letter saying it was all over and the defendant got away with the crime!)

bris

Just divide his annual salary by 365 and that's his day rate and the amount to claim.

The Ltd co not earning because he is at court is irrelevant, but in a round about way it's one and the same really, he still gets his day rate and the ltd co doesn't lose that as it's not coming from the company.

Now as you are doing the paperwork for the company why are you not taking payment for that? 

Sandtree

bris said:

Just divide his annual salary by 365 and that's his day rate and the amount to claim.

The Ltd co not earning because he is at court is irrelevant, but in a round about way it's one and the same really, he still gets his day rate and the ltd co doesn't lose that as it's not coming from the company.

Now as you are doing the paperwork for the company why are you not taking payment for that? 

You mean salary or you mean income? Most PSC directors will be taking £12,500 salary and the rest as dividends (often split amoungst family. The court covers lost salary because of taking unpaid leave not lost dividends.

He didn't lose the £50 a day though (assuming the normal token salary)  because his company paid him in full; they should have reduced the salary and then could have made the £100 or so but didn't... to attempt to claim it now would be fraud