Accommodation expenses

**malvolio** · 14 March 2005, 15:43

Get a new accountant perhaps??

Business expenses are nothing to do with IR35, which is concerned with net income to the company. You can deduct necessary business expense from the gross (where they reduce YourCo's corporation tax) before worrying about the IR35-related portion.

If YourCo pays them (or even reimburses you for them) they are not an issue.

Usual caveats - I'm not an accountant, so check with someone who is (and, obviously, one who does know what they're talking about!)

**foottapper** · 14 March 2005, 16:07

Re: Get a new accountant perhaps??

The thought has crossed my mind...while I still have to bear the cost , unless a new one can undo what has been done.

Because the expenses came out of my own pocket it is deemed as taxable anyway, unless I can undo it; I am guessing I'm out of pocket about 3 grand.

**planetit** · 14 March 2005, 16:12

Re: Get a new accountant perhaps??

I think you’re wrong Malvolio. Not every expense your company incurs can be deducted before the deemed salary is calculated. You can only deduct some of the expenses which would be allowable if you were a direct employee of the client (and not all of them, since training is apparently not allowable). It’s a long time since I had to work any of this out, so I don’t know whether accommodation is allowed.

**malvolio** · 14 March 2005, 16:49

Happyto be proved wrong...

...but the usual test is "Would the expense have been incurred if it hadn't been directly as a result of company business?". In the case of mid-week living expenses when working away from home (as I assume these to be) , they pass the test and are deductible.

Under the IR35 regime, as I understand it, you can't deduct the cost of running the business - training, doing the books, printing, publicity,etc. - since that's what the 5% is for. You can, however, pay legitimate business expenses to your "employees", if only because a real employee (in Hector's fantasy IR35 world, that is not the same thing as a deemed employee) would be able to claim the same thing.

Of course, I don't pay it, so haven't been keeping up either. Any real accountants out there?

**xoggoth** · 14 March 2005, 20:26

Re: Happyto be proved wrong...

NAA but once again I concur with Malvolio who always seems to know his stuff. If your contract is away from home, you have been there for less than two years (assuming you have not recently had other contracts close by), necessary living and travel expenses are deductible. Your accountant is an idiot.

PS Assuming you have no skeletons in your closet it may be possible for you to claim this amount back or (much easier) you can deduct it from future profits. Legislation on allowable business expenses( I can find the reference if needed) allow you to claim expenses incurred in the relevant period "or in a previous period"

**Vetran** · 15 March 2005, 00:22

Re: Happyto be proved wrong...

The very fact you have to ask suggests your accountant hasn't explained this properly. Maybe talking to another one or asking them to explain it again may help.

You pay them a premium for professional advice, any decent bookeeper will do your books for < £400 a year as Xoggoth will tell you its not nuclear science.

If your contract is under or you can reasonably expect it to be under 2 years reasonable travelling / living expenses would be exempt even under IR35. Also assuming the destination is significantly different ( > 5 miles) from previous contracts.

Plenty of paperwork on the IR website about this.

Why are they doing your 2003 - 2004 books now? Sounds a little late, you needed your companies house return in in Febuary.

**expat** · 15 March 2005, 09:31

Re: Happyto be proved wrong...

Under the IR35 regime, as I understand it, you can't deduct the cost of running the business - training, doing the books, printing, publicity,etc. - since that's what the 5% is for.

I thought that you can't deduct "the 5%" willy-nilly; but you can deduct the cost of running the business, subject to a limit of 5%.

And of course you (not the Co) can claim whatever an employee could claim.

**planetit** · 15 March 2005, 09:32

Re: Happyto be proved wrong...

You can deduct the 5% "willy-nilly" From the calculation of the deemed salary regardless of the cost of running the business.

link

Accommodation expenses