Contracting and umbrella rubbish

**oraclesmith** · 10 July 2007, 23:06

It's quite simple really. You are the umbrella's employee, so they can pay you, from your own earnings, per diem (fixed price) expenses providing that you actually incurred them. Their dispensation covers THEIR accounts department from having to collect receipts from YOU.

It's up to you to prove to the Revenue chaps that you actually incurred these expenses and are therefore eligible for the tax free payment. Therefore it is in your own interest to collect the receipts even though your 'employer' the umbrella don't need them to pay you out.

The umbrella are leading you into a false sense of security because if there is an investigation it's you that gets done, not them.

OK ?

Also, it's entirely reasonable for HMRC to insist that you collect a receipt or some other evidence (eg pay & display ticket) for pretty much all the expenses you incur. Almost every retail outlet of any kind issues receipts so there's really no excuse. Unless you always eat from Big Dan's Burger Van!

**Bluebird** · 11 July 2007, 09:03

The other point is the 24 month rule - you have to stop claiming expenses [including travel ] where the "tempory workplace" become your "normal workplace" - this is NOT after 24 months, but at the point you know you will be on site longer than 24 months.

**LisaContractorUmbrella** · 11 July 2007, 09:03

Originally posted by Spiderman

have read a lot of info on this site yet I went to an umbrella called Danbro and on their site and backed up in an email I got this:

Unreceipted Expenses

Subsistence

Where you are unable to obtain a receipt, and you are working at a temporary workplace, then within the umbrella company option subsistence can be claimed on the following basis -

Up to £10 if you work more than 5 hours a day not including travel time and excluding breaks

Up to £26 if you work more than 10 hours a day including travel time and excluding breaks

So can someone tell me who's bl**dy right?! One side say must have receipts for everything and these guys say within their dispensation receipts not required.

Further contact with them revealed this:

"The primary advantage of working through Danbro’s umbrella PAYE service is that you will be an employee of Danbro IT, which means that it is our responsibility to ensure that you are compliant with the regulations set out. Therefore any potential investigations which may arise would come to us and the burden of proof lies with us.

It is advisable for you collect receipts in support of your subsistence claim two or three times a year. If you are not able to obtain receipts from work you can use facilities outside of your place of work, Starbucks, Motorway services etc. "

I also raised the question about normal place of work and stuff and they said

"You are able to claim expenses for a single place of work for up to 24 months, after which you will lose your entitlement to claim expenses. "

Now with reason I 'ave to agree...you can't always get receipts but everyday I will be getting meals....

God I hate all this umbrella and contracting garble but I can't get a permie job at the mo.

The whole question of subsistence does seem very confusing as there is so much conflicting information given. Basically, unless you are on the road all day i.e. you are travelling from site to site you cannot claim a daily subsistence allowance. If you go to the same place of work each day you are not allowed to claim for lunch - the way the revenue views it is that you would have to eat lunch anyway therefore there is no additional cost to you therefore there is no legitimate expense

HTH

**Bluebird** · 11 July 2007, 09:14

Originally posted by LisaContractorUmbrella

The whole question of subsistence does seem very confusing as there is so much conflicting information given. Basically, unless you are on the road all day i.e. you are travelling from site to site you cannot claim a daily subsistence allowance. If you go to the same place of work each day you are not allowed to claim for lunch - the way the revenue views it is that you would have to eat lunch anyway therefore there is no additional cost to you therefore there is no legitimate expense

HTH

thats their interpretation, although there's nothing in law that says that - be intering to see if a case ever went to court...

**LisaContractorUmbrella** · 11 July 2007, 09:16

We question the IR direct on this matter as there did seem to be so much confusion - this was their reply:

"I can confirm that contractors cannot automatically claim £21 per day (or any other amount) for each day they are at work. It is also worth saying the Inland Revenue would not give general approval of a company's expenses policy. A dispensation would never cover large amounts of unsupported expenditure"

As you say this is no guarantee of the outcome should it be tested at law but I think it is a fair indication of the IR's feelings on the matter

**Bluebird** · 11 July 2007, 09:23

Originally posted by LisaContractorUmbrella

We question the IR direct on this matter as there did seem to be so much confusion - this was their reply:

"I can confirm that contractors cannot automatically claim £21 per day (or any other amount) for each day they are at work. It is also worth saying the Inland Revenue would not give general approval of a company's expenses policy. A dispensation would never cover large amounts of unsupported expenditure"

As you say this is no guarantee of the outcome should it be tested at law but I think it is a fair indication of the IR's feelings on the matter

Is this a reply from one particular IR office, or from the org as a whole ?

**ASB** · 11 July 2007, 09:31

Originally posted by Bluebird

thats their interpretation, although there's nothing in law that says that - be intering to see if a case ever went to court...

This one do you?

http://www.hmrc.gov.uk/manuals/bimmanual/BIM37660.htm

**ASB** · 11 July 2007, 09:40

So can someone tell me who's bl**dy right?! One side say must have receipts for everything and these guys say within their dispensation receipts not required.

Both are right. The positions are not mutually exclusive. What the don't say is you can claim it without spending it (which you can't of course)..

"The primary advantage of working through Danbro’s umbrella PAYE service is that you will be an employee of Danbro IT, which means that it is our responsibility to ensure that you are compliant with the regulations set out. Therefore any potential investigations which may arise would come to us and the burden of proof lies with us.

Partly true. If they get a complaince review and the IR beleive they are outside the terms of the dispensation then the dispensation will be withdrawn. They may reach a settlement agreement with the employer (but there is nothing that forces that). Ultimately the responsibility falls on the individual taxpayer. If they then cannot establish to the inspectors satisfaction the expenditure was incurred they can expect a bill.

What you do is entirely up to you. What a lot of umbrellas say has been discussed. People don't seem to like the answers. But it doesn't make them any less valid.

**Ardesco** · 11 July 2007, 10:11

Originally posted by Spiderman

have read a lot of info on this site yet I went to an umbrella called Danbro and on their site and backed up in an email I got this:

Yadda Yadda Yadda

Get it in writing from them that they will indemnify you against the costs of any HMRC investigation into your expenses and that they will pay out any fines/tax owing that result from the investigation.

If they agree to that claim away, otherwise you know that they are telling prokies and know that you are going to get fecked over in an investigation.

HTH

Contracting and umbrella rubbish