Reimbursing backdated expenses after giving notice? Please help!

[brother52]

Hello Everyone,

I might have an issue with my umbrella company and would really appreciate any help or pointers.

I have been working for them for a few years. From my earnings as contractor they paid me a base salary and offered to do three things with the surplus: pay it immediately as a bonus, reimburse my expenses from it, or keep it in a "reserve" money pot from which they can continue to pay me when I am between projects. I used all of these options, depending on my situation in a given month, but now I served my notice with about £40K still sitting in the "reserve."

Now is when it gets interesting. I have incurred over £20K of legitimate accomodation expenses that I have not yet claimed, dating back to 2011. Which I expected to be reimbursed with my last payroll. But...

The umbrella company is now saying that some HMRC ruling stipulates that once you resign, you are no longer able to claim expenses. Even though these are the expenses from BEFORE when you gave notice.

This doesn't make a lot of sense to me and they are not too confident either, but googling did not really help. Can anyone share their thoughts on this please, or provide pointers for further research? Is there a way to speak to HMRC directly about that? I would also appreciate a phone number of a professional, as I am happy to pay for consultation to avoid losing £10K.

Thanks in advance.
Egor.

[stek]

Bonus? Spidey senses are tingling, tell us more....

[brother52]

Bonus is just the money paid over the base salary in a given month, taxed the same.

[LisaContractorUmbrella]

I am a little confused. I cannot understand why your umbrella company would give you the option to take part of your salary as expenses - either you have claimed legitimate expenses on which you are entitled to tax relief or you haven't Expenses should be claimed against the period that the work was undertaken - I don't see why you would lose the tax relief on the costs that you incurred over a period of 3 years. Can the OP give us a little bit more information?

[eek]

I am a little confused. I cannot understand why your umbrella company would give you the option to take part of your salary as expenses - either you have claimed legitimate expenses on which you are entitled to tax relief or you haven't Expenses should be claimed against the period that the work was undertaken - I don't see why you would lose the tax relief on the costs that you incurred over a period of 3 years. Can the OP give us a little bit more information?

Without a name you have to wonder what sort of "umbrella" company it is....

[brother52]

It is not salary that the expenses reimbursments come from, I think. Here are some numbers. My salary is £41K per year, but my rate was £400 per day. They receive £8K (£400 x 20 days) per month from the client, make necessary deductions, this leaves a little over £6K. From that they pay me £3400 gross as my salary as per employment contract. This leaves £2600 suprlus from which they can reimburse my legitimate expenses and/or pay it out as a taxable bonus.

For quite a while I did not claim the expenses or taken the bonus, letting the surplus accumulate. Now I want to claim these expenses but they are saying this may be againts some HMRC ruling because I already gave leaving notice.

Does that make sense?

P.S. They also sponsored my work visa which may explain a higher cut or some of their practices. Overall they come across as decent people and I don't think their intention is to pocket my expenses money.

[LisaContractorUmbrella]

Without a name you have to wonder what sort of "umbrella" company it is....

Indeed

[TheFaQQer]

The umbrella company is now saying that some HMRC ruling stipulates that once you resign, you are no longer able to claim expenses. Even though these are the expenses from BEFORE when you gave notice.

They are correct. Once you have given indication that you aren't going to be continuing, the workplace cannot be described as being a temporary workplace any more. As such, you cannot claim expenses for travel and subsistence which relate to your getting to your permanent place of work.

Expenses should always be claimed against the period in which they were incurred, or failing that, claim them before you give notice.

[TheFaQQer]

P.S. They also sponsored my work visa which may explain a higher cut or some of their practices.

Did they find you work, or did you find the contract and just use them to sponsor the visa?

[LisaContractorUmbrella]

It is not salary that the expenses reimbursments come from, I think. Here are some numbers. My salary is £41K per year, but my rate was £400 per day. They receive £8K (£400 x 20 days) per month from the client, make necessary deductions, this leaves a little over £6K. From that they pay me £3400 gross as my salary as per employment contract. This leaves £2600 suprlus from which they can reimburse my legitimate expenses and/or pay it out as a taxable bonus.

For quite a while I did not claim the expenses or taken the bonus, letting the surplus accumulate. Now I want to claim these expenses but they are saying this may be againts some HMRC ruling because I already gave leaving notice.

Does that make sense?

P.S. They also sponsored my work visa which may explain a higher cut or some of their practices. Overall they come across as decent people and I don't think their intention is to pocket my expenses money.

The umbrella company should not be working in this way and should not have sponsored your visa as this can only be done by the company that you are actually performing the work for I believe.

With regard to the expenses - the only HMRC ruling that would affect whether or not they can pay them would concern the temporary workplace rules - if you only worked on a single assignment whilst in their employment, at the point you gave notice you confirmed that it was your intention not to work on another assignment and therefore your place of work becomes permanent by default and tax relief on travel and accommodation expenses is no longer allowable. If you worked on more than one assignment and are still in your notice period then there is no reason why your salary/expenses cannot be paid.

Even if the umbrella company were to pay the money as a bonus which would then be taxable you would have the option to claim the expenses directly through HMRC.