subsistence whilst contracting via ltd

[platforminc]

Bottom line is, looks like I cant claim.

[Craig@Clarity]

BIM37660 - Wholly & exclusively: duality of, or non-trade, purpose: non travel topics: subsistence
Cost of food or drink, taken in whole or in part for sustenance, is not allowable
The cost of food or drink consumed for the human requirement of sustenance is not allowable. It does not matter that work occasions a greater appetite or causes greater expense. The expenditure is at best dual purpose. There is no mechanism to allow an apportionment to give a ‘business’ proportion or the ‘extra cost’ imposed by the business. The whole cost is disallowed.

In the case of Caillebotte v Quinn [1975] 50TC222, Quinn was a sub-contract carpenter, working on sites within a 40-mile radius of his home. When working, Quinn could not go home for lunch and bought one at an average cost of 40 pence, compared with an estimated cost of 10 pence for a light lunch at home. Quinn attributed the additional cost to the need to eat a more substantial meal in order to maintain the energy expended in carrying out physical work and to keep warm during the winter. The General Commissioners allowed the additional cost as a deduction from Quinn’s profits under Case I of Schedule D.

This is in reference to self employment and not employment as highlighted in bold above and so it is not relevant.

Here's another P.S.

You should note that ICTA88/S74 (1)(a) does not include the requirement in the expenses rule for employees that the expenditure be ‘necessary’. Whilst it is reasonable to scrutinise the claimed purpose of an expense you should not attempt to substitute your own judgement for that of the taxpayer. If the taxpayer can show that their only purpose for incurring a particular expense was for their trade, profession or vocation then it does not matter that the same result could have been achieved by different means or that the expenditure in the event fails to achieve the established purpose. Expenditure that is manifestly uneconomic may be an indication that there was another (non-business) reason for it being incurred, in which event you should disallow it.

Wholly & exclusively: statutory background: expenses rule for employees Enjoy!

[LisaContractorUmbrella]

This is in reference to self employment and not employment as highlighted in bold above and so it is not relevant.

Here's another P.S.

You should note that ICTA88/S74 (1)(a) does not include the requirement in the expenses rule for employees that the expenditure be ‘necessary’. Whilst it is reasonable to scrutinise the claimed purpose of an expense you should not attempt to substitute your own judgement for that of the taxpayer. If the taxpayer can show that their only purpose for incurring a particular expense was for their trade, profession or vocation then it does not matter that the same result could have been achieved by different means or that the expenditure in the event fails to achieve the established purpose. Expenditure that is manifestly uneconomic may be an indication that there was another (non-business) reason for it being incurred, in which event you should disallow it.

Wholly & exclusively: statutory background: expenses rule for employees Enjoy!

That's about workwear not food

[Craig@Clarity]

That's about workwear not food

It's not to do with food I agree but it's nothing to do with workwear either http://www.legislation.gov.uk/ukpga/...ion/74/enacted and Deductions: general: prohibitions under ICTA88/S74

It's a follow on from your link and quote to do with duality of purpose which refers to self employment and ICTA88/S74 (1)(a) which is not what was originally being discussed.

[Greg@CapitalCity]

Wow, you guys are bouncing between two different topics here in the Craig@InTouch vs the World debate. Its a Friday afternoon, the sun is out, so lets see if I can get involved;

Craig@InTouch is coming from the employee perspective which looks to be on par with where the OP is at. Although it does not mention subsistence particularly, we're talking about section 337 and 338 of the Income Tax Earnings and Pensions Act (ITEPA) 2003.

While Lisa and malvolio seem to acknowledge this, their angle looks to be section 57A Income Tax Trading and Other Income Act 2005 (for self-employed).

If the OP is coming at this from the employee angle, not self-employed, then we talking about subsistence as the term used to describe food and drink for tax purposes. It can also include other incidental costs of travel such as accommodation. It can include alcohol if this is taken with a meal.

Subsistence is allowable as an expense for PAYE and NICs purposes when it is incurred by an employee or office holder in conjunction with allowable business travel. It makes no difference whether the employee needs to eat to live, or eat to work, the argument does not apply because section 57A does not apply.

For the self-employed, its worth noting from 6 April 2009 they ARE allowed a deduction by statute for their subsistence expenses, providing thata) the trade is "itinerant",you are in a travelling occupation, or (b) if your journey is irregular, or (c) if you are staying away on business overnight. I realise this is not relevant here except to counter the point made by malvolio

You can't claim subsistence, since you have to eat anyway.

[Craig@Clarity]

It's definitely blue skies in Bournemouth. Might be time for a some fresh air

[Wanderer]

Bottom line is, looks like I cant claim.

platforminc, Craig is an accountant - read his first two posts where he gives links to HMRC's guidance. Follow the two links he gives and read what HMRC says. If you are still in doubt, ask your own accountant. If you don't have an accountant yet then just pay the expenses out of your own pocket, keep a log of all the expenses and all your receipts then ask your accountant for advice on what was claimable when you get one. If it's not claimable, throw your receipts in the bin. If it is claimable then you get a nice little tax back bonus. Remember that you only get back the tax you would have paid on the value of your expenses, not the whole amount.

Jesus.... If it's commutable, you're not staying away, so why do you think you can claim for breakfast and lunch? Or do you only eat when you're not at home?

Since it's Friday night and I feel like arguing the point, I'll go on....

Let's consider the typical scenario where the contractor's ordinary place of work is the home office and they are commuting to the client site as a temporary place of work and that this is intended to be and actually is less than 24 months in duration. The contractor incurs travel and subsistence expenses (with receipts and records of journeys kept) and these expenses would not have been incurred if the contractor had worked at home. Therefore the contractor would like claim as an expense to offset against company profits.

We've all been in this situation. Everyone claims it and it's perfectly legitimate. I don't know why you folks are going on about it being tax evasion or something.

You can't claim subsistence, since you have to eat anyway.

That's nonsense.

The logic that the taxman uses is that you still have to eat, so why does a given meal suddenly become claimable just because it's inconvenient?

The simple fact is that (given the scenario I described above) meals are specifically allowed because it's a necessary cost of business travel for attendance at a temporary workplace.

Presumably there is no reason why you can't eat breakfast before you leave home???

Why do you presume that? Do you think that breakfast would ever be claimable?

The dispensations that HMRC allow for umbrellas sound like reasonable guidelines to what you could claim as a LTD company and this is what a major umbrella's guidelines are (you can claim more but you have to justify it):

• Up to £5 meal allowance when travelling to your temporary place of work before 7am
• Plus up to £5 meal allowance when working over 5 hours (max £10)
• Or up to £15 meal allowance when working more than 10 hours (max £20)

Of course you can't claim a flat rate per diem though your LTD but it's a useful guideline as to what HMRC see as acceptable scenarios and allowances for meals would be.

Ignore umbrella rules, they have their own way of doing things that no longer apply to you.

Really? So in the situation where one contractor was working through an umbrella and the other was working through a LTD company, the umbrella contractor could incur an expense, obtain a receipt and legitimately claim the expense back but the LTD contractor couldn't?

I know umbrellas have a dispensation agreement with HMRC but as umbrellas keep saying, the dispensation doesn't change the rules about what expenses you can claim it just reduces the paperwork. What's the difference then. Is there one rule for umbrellas and another for everyone else? I don't think so....

[mudskipper]

When I was permie, if on a remote site I could claim lunch.

I apply the same philosophy now I'm contracting.

Didn't realise it was an issue for debate.

I'm with SJD.

- Meal allowance

You can claim actual meal costs whilst you are working at a remote site, away from your normal place of work, or when staying away from home overnight, but daily, round sum claims for meals are not permitted.

[malvolio]

When I was permie, if on a remote site I could claim lunch.

I apply the same philosophy now I'm contracting.

Didn't realise it was an issue for debate.

I'm with SJD.

- Meal allowance

You can claim actual meal costs whilst you are working at a remote site, away from your normal place of work, or when staying away from home overnight, but daily, round sum claims for meals are not permitted.

OK, l so perhaps mine is a philosphical approach rather than a strictly legalistic one. I don't claim breakfast as part of my journey to work, unless that hourney is to somewhere I'm not usually based and it takes so long to get there that I stop off on the way for a break. That's just me, others clearly have a different view,.

However, the deeper point at issue here is that some of us are struggling to make contracting into an accepted, genuine thrid way of working. Doing things that are, to be kind, stretching the rules simply to save 20% of the cost of a bacon sandwich doesn't exactly help us acheive that target.

YMMV. That's not a problem, if it makes you happy. I'll stick to my own approach, and I will encourage others, especially thiose who haven't thougt it through yet, to do the same. Else we all end up like the prat I know who is demanding a rate rise from the agency since he has now gone over the 24 month barrier. He's currently claiming £200 a week for a round trip of 24 miles. Go figure...

[d000hg]

Sometimes I have to be at site quite early in the morning as I'm doing the morning shift, which deosnt give me enough time to make breakfast or else I will be late.

Get up earlier then. You think milk-men and bin-men get tax-relief on buying breakfast?

When I was permie, if on a remote site I could claim lunch.

You really can't see the difference?