Limited company and Subsitance

[Lewis]

My view is that there is a world of difference between claiming for the odd sandwich and coffee whilst on site, and systematically claiming up to what, £25 a day for lunch, evening meals, even breakfast I've seen touted about by the less than scupulous.

I'm still not 100% sure what to do about this. The Puma is happy it is allowed. Simon, would you advise your clients that they could claim something like £5 per day then? I had always thought the advice was not to claim lunches. I'm looking in the very good SJD guide to contracting which I downloaded and there doesn't seem to be any mention of lunches/subsistence in there.

[malvolio]

I'm still not 100% sure what to do about this. The Puma is happy it is allowed. Simon, would you advise your clients that they could claim something like £5 per day then? I had always thought the advice was not to claim lunches. I'm looking in the very good SJD guide to contracting which I downloaded and there doesn't seem to be any mention of lunches/subsistence in there.

There are no rules, only guidelines.

In general, claim what you like, it's your company and your rules. However, anything other than a trivially small amount may be seen as a BIK if Hector ever does a PAYE audit, and the risk then is not that you lose the tax on that amount, they may decide to disallow all your expenses - and that gets expensive.

The safe assumption, and the one I stick to, is that personal lunch is not claimable: after all, even a low-paid contractor can probably rustle up a fiver for lunchtime sarnie. Team lunches are claimable business expenses, of course, if it's your team, but then you can't claim the VAT back.

Complex, isn't it...

[el duder]

Can you claim food allowance on your limited if your working at client site

shut it.

[Lewis]

the risk then is not that you lose the tax on that amount, they may decide to disallow all your expenses - and that gets expensive.

Ouch! That seems rather harsh, so are expenses at their discretion as opposed to being something you are entitled to by law?

[malvolio]

Ouch! That seems rather harsh, so are expenses at their discretion as opposed to being something you are entitled to by law?

Jeez!! For the last time, HMRC's default position is that if you claim for money - like lunchtime sarnies - that you would have had to spend anyway, on the basis that most people eat something at some point in the day, then it is not of benefit to the business, nor is it necessarily incurred as a result of operating the business, therefore it is a BIK.

Furthermore, if they decide you're taking the piss by claiming for butties from the corner shop and not paying the BIK on the income that represents, then you are most likely taking the piss everywhere else so will disallow all expenses, slap you with a bill for the BIK taxes that represents, and wait for you to prove them wrong.

It's not f***ing hard - why should the average taxpayer subsidise your lunch?

[xoggoth]

Yes, but if you have an inspection they tend to slap you for absolutely everything anyway as they are a) too f* lazy to do the job properly and b) so dishonest that they are quite happy if some are stupid enough to pay it. It does not mean you have any obligation to pay anything that is not legally due.

[MonkeyWorld]

When I started contracting in '98, I was advised by my accountant (specialists in the IT contractor market with over 200 clients) that I could claim £4.25/day for subsistence and £9.30/day if over 10hrs without receipts.

I've been doing this for close on 10 years now, the revenue visit my accountants every year to check they are following the guidelines and have made the old suggestion that has filtered back, but subsistence has never been one of them.

Whenever I've asked them about it, they've always said that these rates are 'IR approved', which I take to mean that they've checked with the tax inspectors and local tax office that they are reasonable for working away from my company office (my home).

Others get advised differently and I have searched the revenue site on a number of occassions to try and point others at some such guidelines (but always draw a blank).

Providing the amounts are kept reasonable I don't see the issue, the revenue have got bigger issues to deal with. If your accountant advises against claiming subsistence then ask them for more clarification and/or point them in the direction of this thread and in particular the great work from ThePuma.

[Lewis]

Jeez!! For the last time, HMRC's default position is that if you claim for money - like lunchtime sarnies - that you would have had to spend anyway, on the basis that most people eat something at some point in the day, then it is not of benefit to the business, nor is it necessarily incurred as a result of operating the business, therefore it is a BIK.

Furthermore, if they decide you're taking the piss by claiming for butties from the corner shop and not paying the BIK on the income that represents, then you are most likely taking the piss everywhere else so will disallow all expenses, slap you with a bill for the BIK taxes that represents, and wait for you to prove them wrong.

It's not f***ing hard - why should the average taxpayer subsidise your lunch?

So in summary The Puma (an accountant I believe) is talking rubbish and ASB having been investigated and been allowed lunches, we'll ignore that. No need for further clarification from Simon at SJD because we have you. End of thread, next ...

(joking aside, Simon, I would very much like to hear your take on it as a local expert).

[simondolan]

So in summary The Puma (an accountant I believe) is talking rubbish and ASB having been investigated and been allowed lunches, we'll ignore that. No need for further clarification from Simon at SJD because we have you. End of thread, next ...

(joking aside, Simon, I would very much like to hear your take on it as a local expert).

It really is a difficult and contentious issues (as you can see from the tread!)

OK, legally speaking you have no right to claim for subsistence. In order for an expense to be allowable it must be wholly, exclusively and necessarily incurred in the course of employment (you are employed by your own Ltd Company). Case law is notoriously strict on this subject. A female barrister claimed once for the purchase of black clothes she wore in court. Fair enough you might think, but the claim was thrown out (at the House of Lords eventually I believe) on the basis that the clothes served a dual purpose - ie they were for business use, but also served to keep her decent (no sniggering please). Now, a barrister is self employed and so the basis of claim is actually less strict than that of an employee.

So, if the Revenue deny your claim for subsistence you have no basis in law to appeal.

However, it is self evident that most Revenue districts will allow claims to a varying extent, but it is important to realise that they do this out of policy and not statute.

What does this mean? Well, the Revenue can deny these claims whenever they choose, and they can go back if they wish for 6 years. Usually they will treat the disallowed expense as being monies received net of PAYE, so they will gross up the amount to add on employers NI, employees NI and the tax - your £10 a day for lunch then for PAYE purposes might add up to £18 a day.

So, say 200 days £18 a day over 6 years is £21600. Add on interest and penalties and you've got a bill for over £30k.

OK - extreme example but you get the gist.

The question then to ask yourself maybe is "Do I think the Revenue are capable of changing their minds and starting to disallow these claims?"

[Bluebird]

I guess faced with the risk of a £30k tax bill or paying an extra couple of quid per month the option is obvious.

Afterall we all pay for the IR35 insurnaces, so why take the risk else where ?

I can see ThePumas & ASDs point, but as we all know, HMRCs view of contractors is totally different today than it was 10 years ago - today they see us all as Tax Fiddlers, and to that end may at some point use anything they can to give us slap across the chops.

I for one am using the damage limitation, for the sake of a few quid is it really worth it? And more to the point what sympathy would you get, as Mal pointed out - why should other tax payers [ us included ] subsidise your lunch ?