Well, yes, I am looking for a reason not to use (if I don't have to) a vehicle that is widely viewed as a method of tax evasion - encouraged by the umbrella themselves.
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You are not understanding what a dispensation is.Originally posted by Damo1176
The IR is not sending out a letter saying that an umbrella company can offer you £xxx in subsistance.
The IR is sending out a letter to the umbrella company saying "You do not have to provide us with information on expense claims of £5 per day or less, when we want that information we will collect it ourselves when we investigate <JoeBloggs> contractor"
dispensations are absolutley nothing to do with you, it is a way of reducing paperwork for umbrella companies. The reason so many used to only let you claim the amount they have a dispensation for would be to make thier accounting simple, they check the dispensation checkbox and thier software does it all for them rather then having to enter in each contractors individual expense claim and then working it all out.
It is simple a time saving exercise for the umbrella company, not a right for you. If you are investigated you will fail if you do not have receipts and be charged/fined accordingly.
What can people not get this through thier thick skulls?
Remember if something is too good to be true, it probably is!!!Comment
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I decided to tackle Orange Genie head on re dispensations and used the example somebody put in of the dispensation case and the need to eat whoever you are and got this response:
I have looked into your query for you and as you can see from your attachment below, this information was issued in 1975 (The case of Caillebotte v Quinn [1975] 50TC222, is described at BIM37660.). The IR35 law was not active then.
We are issued with a specific dispensation by the HMRC. Therefore, as long as you only claim the exact amount of daily subsistence which you have spent each day and as long as you keep your daily subsistence receipts, you have nothing to worry about, as we are 100% compliant with the HMRC and therefore you will be 100% compliant as well.
Please do not hesitate to contact the customer service centre if you have any further queries.
I then checked a letter from the IR fully signed and it says the foolowing:
Travel and Subsistence
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Meal allowance scale rate payments may be paid when the employee is required to work away from their permanent workplace (more than 5 miles) where actual reimbursement is not claimed:
Day subsistence
Over 5 hours £5
Over 10 hours £10
Night subsistence £25
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Orange Genie then say that you should keep receipts because they are legally obligated to review claims, which they will warn you about, then ask for receipts, if then these are not given they are legally obolgated to pass this to the HMRC. They advise you keep receipts for 6 years. THis means that the fella through 360 group who claims £26 a day wil have his receipts done one week,w hich I am sure he will provide receipts to cover the full amount, keep them happy and then unless the HMRC decide to collar for him a random reason and find his is receiptless he's home scott free.Comment
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Originally posted by Damo1176
When an umbrella company applies for a dispensation, which is just an accounting tool that cuts down on paperwork, they have to provide a list of expenses (with supporting receipts) that their contractors have been claiming. If the IR are satisfied that the expenses are reasonable the dispensation will be isseud. It is possible that some contractors will be on the road all day and will therefore be entitled to claim an amount for lunch so it is not unreasonable for the umbrella company to have included the scenario. The problem comes when the dispensation is (wrongly) used to convince contractors that they are actually entitled to claim all the expenses that are listed on the dispensation
HTHComment
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Sounds like the guy at Parasol was right then.
James, watch what you say about employees at umbrella companies - as you can see, many of them read these boards and might be able to identify you from the context of your posts!Comment
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Thank you, Lisa, that is extremely helpful - and goes to show how little Parasol understand about the PAYE dispensation.
I am amused that one umbrella has completely misunderstood the concept of precendent, and implies a 1975 tax case is 'outdated'. What IR35 has to do with it is anybody's guess...Comment
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About what?Originally posted by spiderloverComment
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Well, presumably he said that you could only claim for money you had actually spent.........Comment
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>>Well, presumably he said that you could only claim for money you had actually spent
If only! He said that sub-£5 subsistence claims were round-sum subsistence claims, and that you did not require a receipt - the £5 was an 'entitlement'. The only circumstances of which I am aware where a receipt is not required is the overnight subsistence claim.
They are very clear in their literature that receipts are only required if expenditure is in excess of £5.
Daily Subsistence
Up to £5 per day if you work more than 5 hours.
Up to £15 per day if you work more than 10 hours.
Alternatively Parasol’s dispensation flexibility will allow
reasonable subsistence amounts to be claimed above the £5
or £15 allowances provided they are incurred wholly for
business purposes and are supported by the original
receipts.Comment
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You need to get your weasel-word detector out. Nowhere there does it say that you don't need receipts below the £5/£15 - though it's cleverly worded to imply otherwise. All it says is that they need to see supporting receipts above that value. The taxman, of course, will expect to see receipts for all expenses should he request them.Originally posted by james14Comment
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