LTD using PAYE vs Umberalla PAYE

[LisaContractorUmbrella]

There is a well know umbrella company which displays their dispensation on their website and hopefully this will explain where the 6k comes from
This is not the company who quoted me but as I understand it , all the big umbrella players have similar dispensations
If you leave your home before 7.30 and get back after 6.30 . you are entitled to unreceipted tax free money of anything between 20 - 25 pounds a day
Perhaps one of you could ring the tax office and explain with more clarity and see what response you get
In addition seeing as Simon Dolan's 'gospel' gets a fair amount of publicity , perhaps he can contribute to this

Gravesendboy, you should read the small print on this site very carefully as I am sure it will say somewhere that you will need to provide receipts should the IR request them. The examples you have quoted are the equivalent of Gordon Brown giving you £100 per week just to go to work - I think we can safely say that this, at best, highly unlikely

[malvolio]

Oh FFS - it is not a tax free allowance...

It is the amount Hector will allow you to claim as incidental living expenses for breakfast, lunch and dinner where you can't readily get them at home (leaving early in the morning, getting home very late, staying away, that kind of thing) without any thought of it being classed as a benefit in kind. It does not mean you can claim it blindly, it does not mean you don't have to have a reciept or some other proof of purchase, it is not free money, it is not legal to claim money you haven't spent with the sole exception of £5 a day for small incidentals (paper, phone call home, whatever) if, and only if, you are staying aay from home. Go and claim £6k a year for nothing and see how far you get justifying it to the taxman.

Now either listen to what you're benig told or go away and learn the business you claim to have been in for some years.

[Xtrain]

Possible ?

I'll save Simon the trouble....

From the umbrellas perspective it is legal. They are allowed to accept your expense claims without receipts because the IR have given them a dispensation to do so as long as YOU have indicated that you have spent that much. Check the small print as somewhere in their claiming process you will no doubt sign or check a tick box confirming you have spent that money.

From your perspective you can claim anything you like but should the IR ever request proof then I'm afriad if you haven't got the receipts then you will be in deep poo! So by all means claim the allowances that the umbrellas refer too (and please note again these are SALES professionals trying to SELL you something) but if you do and you don't have receipts then don't be surprised if at sometime in the future you will have to cough up a load of cash + penalties to the IR.

So in summary is it legal....from the umbrella perspective yes (i.e. their arse is covered becuase you claimed it and they didn't) and from your perspective only if you have spent that amount AND have the receipts to back it up when they come asking.

Finally, and I'm awaiting this day big time as a smug ltd co. contractor, how long do you think it will be before the IR come asking. Simple maths would suggest £6K per annum per contractor would make a sizeable sum (e.g. 6k x 6 years (that they can go back) x 50,000 contractors (just a guess) = £180M.

With this amount of tax free expenses to go at you can bet your bottom dollar the day will come in the not too distant future.

[gravesendboy]

Fraud

Thanks for that mal !
As you seem to be a regular poster on here , perhaps you should try and advise all the fresh contractors who are blindly carrying on in ignorance and are being missold (
As mentioned in my previous posts , I a limited company contractor , hence my knowledge is limited in the umbrella sector
However if you are right , should 'nt you be reporting these companies to HMRC for tax avoidance as they are blatantly underpaying their taxes ?

[simondolan]

Perhaps Simon could say a simple yes or no as to whether the £ 6ktax free allowance for being out of the home for more than 10 hours is legal or not ?

Sure.

No, not from the point of view of the contractor.

[ASB]

Thanks for that mal !
As you seem to be a regular poster on here , perhaps you should try and advise all the fresh contractors who are blindly carrying on in ignorance and are being missold (
As mentioned in my previous posts , I a limited company contractor , hence my knowledge is limited in the umbrella sector
However if you are right , should 'nt you be reporting these companies to HMRC for tax avoidance as they are blatantly underpaying their taxes ?

1) We try. It's just a bit difficult to talk to people who simply put their fingers in their ears and go "I can't hear you, na na na".

2) The Umbrella are not those doing wrong. They have a dispensation which they use, and what is for has been very patiently expalined a few thousand times now.

3) If and when the umbrellas employees get investigated and cannot justify then the Umbrealla will lose it's dispensation. If it's compliance procedures were deemed inadequate it may get sanctioned.

4) If an umbrella actually says "claim 25 for lunch etc eith no questions asked and no receipts required by the IR" they they could possible be seen as encouraging evasion. None of them say this to my knowledge.

[malvolio]

4) If an umbrella actually says "claim 25 for lunch etc eith no questions asked and no receipts required by the IR" they they could possible be seen as encouraging evasion. None of them say this to my knowledge.

Ahem! http://www.prosperity4.com/prosperity4/index2.aspx

However, take a look at their PDF on the detail of their expenses policy (a 1.2Mb download not linked from the expenses advertising blurb) and it includes references such as

The relevant entries in this guide let you know whether or not you need to submit receipts to Prosperity4. But even when you don’t need to send them to us, please do file your receipts with your own records.

...which to my mind tells you that you should receipt everything for your own records.

So they may well be open to accusations of misleading advertising but they are not actually saying that no receipts are necessary at all.

Bugger me, am I actually justifying P4's wesbite? I think I need to lie down...

[gravesendboy]

Who's going to tell them ?

Forgive me if I disagreee but it would be interesting if all the people posting on this subject called the top umbrella companies and see what exactly they tell you
I can only tell you from experience that the question they ask is how many hours I was out of the house for and when I told them 'around 11' , they tell me I am entitled to tax free sums ....
There's no mention of having to actually incur these expenses ?
There must be thousands of contractors who have underpaid their taxes
Now the question is .. who is going to tell them ?

[Robwg]

I must admit - should the day ever come when the Umbrella's are taken to task for this then I could be up sh*t creek for the first year and a half of contracting.

Back when I was a naieve noobie - I went with P4. And the guy who did the quote basically said nothing about receipts, tax investigations - or anything - he just factored in the 15 quid a day you are allowed as part of your monthly quote. So I blindly claimed the 15 quid a day for about 18 months.

When I changed to Parasolit (before eventually going Ltd) - to be fair they did actually say I needed receipts.

Still - makes me very irritated that I have been potentially left exposed - and I feel I have a fair case against P4 about it as the initial quote should have explained that.

[Lucifer Box]

There's no mention of having to actually incur these expenses? There must be thousands of contractors who have underpaid their taxes. Now the question is .. who is going to tell them ?

What kind of retard seriously believes that you can claim an expense you haven't incurred? Is there anyone who genuinely believes that the UK taxpayer is going to give them some money just for leaving the house in the morning? I suspect they know full well what they are doing and choose to ignore the consequences believing that "I did it because the salesman told me it was okay" will be some kind of decent defence.

Maybe it's the same mentality that leads people to believe they can win the jackpot in a lottery they haven't even entered?