Slapped wrist or asking for trouble

[ASB]

Ok, so what happens if you do claim it and how do you get caught?

The latter will start with either an aspect enquiry or a compliance review into your employer. There is quite a low chance of an aspect enquiry, about 1% are conducted randomly I believe.

A good trigger for an aspect enquiry is anything not adding up on a tax return.

Now given the general focus on umbrellas etc I think it is quite likely that HMRC will be conducting compliance reviews on them fairly soon. That gives them a nice list of all the individuals to investigate. Don't forget that your brolly also submits your expenses to the IR.

Now what happens if your are unable to satisfy them immediately?

Firstly you spend a lot of time at the tax office or your home having meetings with an inspector. They pour through everything you have done for years and generally make a huge nuisance of themselves. [Assuming you are prepared to cooperate at all that is]. This is a process that takes usually months (years in my and a lot of other cases).

After a lot of arguing you agree a settlement figure. This will be at a minimum the tax unpad plus statutory interest and penalties. Penalties start from 100% and are reduced according to the level of cooperation. You also have to sign a declaration which basically says "I have now disclosed absolutely everything about anything you could possibly want to know for this period". [If they then turn anything further up - and they are perfectly entitled to carry on looking you will be in very big trouble indeed. This is a common route to going to jail. At this point they generally know if you are still hiding anything].l

This is of course provided the IR believe it was simply an error on your part. If they beleive it was deliberate (but only generally if the sums are largeish) they just go for criminal conviction (and send you a random assessment you need to try and defend - this can be difficult from parkhurst).

But will they bother for the sums your are stealing (this is what you are proposing to do)?

Probably. It is in HMRC interest to investigate small oversights agressively. This is because when you are down the pub you'll say to your mates "that rotten sod from the IR, 3 years of twatting about a few hundred quid in penalties and all for mistakenly claiming a fiver". This is a hyge deterrent to reasonably honest folk.

Of course when you get the enquiry they may be easy to please.

[Ardesco]

What do they do, drag everything up?! Some believe that if they get caught the'll just end up paying back what they owe, just simply saying they have not got the receipts and thats that.

Absolute worst case scenario is that you can be convicted of fraud and locked up. I belive the maximum sentace for fraud can be up to 30 years.

I'm not saying you will get locked up for 30 years for claiming £5 a day, but if it does go to court and the prosecution proves that you have defrauded the tax man for a large amount of money on a consistent basis for a very long time and shown no regret the judge can always take a harsh view...

Is it really worth it?

[Old Greg]

What I can claim and get away with really. The fact that some people get away with murder is just me venting frustration!

If you're that bothered dob them in (wouldn't do it myself). There are plenty of shop-a-benefit-fraudstet phone lines. Perhaps one for companies would keep us all honest (and as someone said - it is stealing).

[Damo1176]

Thought you'd be interested to see this.

My friend goes through 360 Group and he told me to switch as minimum I could claim £10 a day subsistence and £5 postage a day too. He often claimed £26 a day because he was out of the house for longer than 10 hours. He was told that if the IR investigated that he would get warning and would have to provide receipts for a week to prove their compliance.

I wrote to them to get it in writing and at first they declined saying to call them, I then received this email:

[I]All Umbrella companies are given a dispensation on TAX FREE EXPENSES, as part of our dispensation for money and day for food and drink this is generated by how many hours a day you are out of the house.

More than 10 hours = £26.00
Less than 10 hours = £10.00

Both are unreceipted, I mean we obviously have to do compliance checks so there could be a week where we ask you to keep all receipts but our dispensation is base on you being out of the house.

Hope this helps


That to me opens the door for many to claim and prove compliacne every once in a while, based on this he is making over £200 a month in unreceipted unproved expenses!

[Old Greg]

Thought you'd be interested to see this.

My friend goes through 360 Group and he told me to switch as minimum I could claim £10 a day subsistence and £5 postage a day too. He often claimed £26 a day because he was out of the house for longer than 10 hours. He was told that if the IR investigated that he would get warning and would have to provide receipts for a week to prove their compliance.

I wrote to them to get it in writing and at first they declined saying to call them, I then received this email:

All Umbrella companies are given a dispensation on TAX FREE EXPENSES, as part of our dispensation for money and day for food and drink this is generated by how many hours a day you are out of the house.

More than 10 hours = £26.00
Less than 10 hours = £10.00

Both are unreceipted, I mean we obviously have to do compliance checks so there could be a week where we ask you to keep all receipts but our dispensation is base on you being out of the house.

Hope this helps
Regards
Terri Fiander

That to me opends the door for many to claim and prove compliacne every once in a while, based on this he is making over £200 a month in unreceipted unproved expenses!

So, he's stealing from the taxpayer, then?

[Ardesco]

Thought you'd be interested to see this.

My friend goes through 360 Group and he told me to switch as minimum I could claim £10 a day subsistence and £5 postage a day too. He often claimed £26 a day because he was out of the house for longer than 10 hours. He was told that if the IR investigated that he would get warning and would have to provide receipts for a week to prove their compliance.

I wrote to them to get it in writing and at first they declined saying to call them, I then received this email:

All Umbrella companies are given a dispensation on TAX FREE EXPENSES, as part of our dispensation for money and day for food and drink this is generated by how many hours a day you are out of the house.

More than 10 hours = £26.00
Less than 10 hours = £10.00

Both are unreceipted, I mean we obviously have to do compliance checks so there could be a week where we ask you to keep all receipts but our dispensation is base on you being out of the house.

Hope this helps
Regards
Terri Fiander

That to me opends the door for many to claim and prove compliacne every once in a while, based on this he is making over £200 a month in unreceipted unproved expenses!

Naughty Naughty Terri, you should be telling your clients that they should be keeping all recipts because when HMG have a look at your clients accounts they will expect to see them.

A good reason to steer clear of 360 group IMHO

[Damo1176]

TO add further information she continues and basically says that they get warning from HMRC and then get their contractors to prove compliacne from a week then settle back to no receipts again!

With the new legislation in light im sure you are hearing a lot of different messages, I cannot speak for other companies only how we are. 3Sixty have been established for over 8 years and have always maintained a high dispensation this is because we have always been able to produce evidence that yes contractors can claim this amount of money each day.

Yes a dispensation is for the company but using a PAYE umbrella solution you become an employee of that company and that is why you are also able to claim this dispensation.

With so much changed recently lots of other Umbrella companies operated as a MSC or a PSC now because of this they have to build their dispensation again where as we have never done anything wrong, have not changed to comply with the new legislation purely because we have never done anything wrong an in the budget report it states that yes you can use a PAYE umbrella solution this are not targeted by eth new Legislation.

I'm afraid that yes you will be told other things which isn't necessarily how we all operate and you can only go with what your being told. I'm sorry your getting told such conflicting information but we are fully compliant and are not at any risk with the Inland Revenue or doing anything with shouldn't in light of the new legislation.

Terri Fiander

[Cowboy Bob]

I'm sorry your getting told such conflicting information but we are fully compliant and are not at any risk with the Inland Revenue or doing anything with shouldn't in light of the new legislation.

Terri Fiander

That reply is VERY carefully worded. Whilst it's true that they're fully compliant, it is the individual contractor who will get into trouble.

[Ardesco]

Clever marketing bulltulip. Ask her if she will indemnify you for all of the expenses that you claim for and pay any monies owed to IR if YOU are investigated and IR says that because YOU don't have receipts they are going to fine YOU, levy penalty charges against YOU and expect £XXX amount back in tax.

I'm sure she will refuse to do this.

[Damo1176]

Makes me feel quite sick, 360 have basically made out to me that I can claim £10 every day and only once every so often will they check my compliance by asking for receipts for a week and then continue to alow me to claim £10 a DAY without receipts. For a 40% tax payer thats over £100 in fraudulent expenses.

I don't want to risk it but I wish I could show people around me the real risk, not the what ifs but hard fast cases where IR have investigated a meagre case (not a big bod whos done loads of fraud). Therefore giving me the satisfaction that everyone is on levelk playing field rather than the bad people being rewarded for their dishonesty!