Expenses and IR35...

[LouC]

Hi everyone,

The company I am contracting for want me to go to Prague for a few days. Obviously they have said that I can expense hotel, flights, etc, etc to them.

However, where does this put me in regards to The Revenue?

Surely if the client is paying my expenses then that is the same as they would do for an employee (IR35?). How would flying to Prague be any different from driving to Manchester for a meeting, in which situation I would definately pay for and charge the mileage to my own ltd company?

Has anyone else had this problem? Any solutions?

Thanks!

Lou

[Sockpuppet]

Getting them to pay for the flights directly I see as no issue for IR35. The CurrentClientCo you have to book flights through a certain agent (American Express) and you never see a bill. For hotels you have to book but then get a bill and claim it back. Also as the agents are 3rd party companies not employed by ClientCo I could ask for a bill.

My argument is that the rates they get a fantastic...much better than I could get as a small Ltd so it makes commercial sense for me to use that method rather than book flights and submit an expense claim.

Not sure how HMRC see that. I know they don't like direct expense reimbursements so mine all go through an agency. But directly when I don't see a bill....not sure.

[Ruprect]

Hi everyone,

The company I am contracting for want me to go to Prague for a few days. Obviously they have said that I can expense hotel, flights, etc, etc to them.

Strip club

[Cheshire Cat]

YourLtdCo pay for the cost of the flights/accommodations
YourLtdCo then invoice TheClientCo for these "expenses"

[LouC]

Thanks for your replies.

But surely if the client pays for my expenses, even if my own Ltd Co books them, then this is the same as an employee?

Or am I completely wrong?

For example, my I expense my Ltd Co for my mileage and parking going to work, but I don't claim this back from the client....

[Sockpuppet]

Or am I completely wrong?

Yes you are.

[beaker]

The guidelines for working outside IR35 are quite clearly set out by HRMC.

just kidding guys, oh I crack me up sometimes...

[malvolio]

Yes you are.

What he said. It's a business expense that you have carefully managed to offset by being ablke to recharge it directly to the client.

And just to confuse you even further, you should charge VAT on it when you invoice them. I leave why that works as an exercise for the reader.

[oracleslave]

What he said. It's a business expense that you have carefully managed to offset by being ablke to recharge it directly to the client.

And just to confuse you even further, you should charge VAT on it when you invoice them. I leave why that works as an exercise for the reader.

able

Malvolio why does that work?

[malvolio]

able

Malvolio why does that work?

Told you...

Because the expenses are incurred by you providing a service to your client and will be included on your invoice to them. If you are VAT registered, all charges on your invoices must have VAT added - that's why it's called Value Added Tax. It's non-money anyway since they will pass it on to their clients.

If they are paying the costs directly, you can ignore them since they won't form any part of your business turnover. If they send you a personal cheque or some such variant, you will have to declare it on your P11D so not a good idea, since it takes you away from a business relationship and is a bad thing, IR35-wise as well as being bad accounting practice.

So all in all, far better to pay it all yourself from Company funds and charge it back at cost (plus VAT...), just like a real business.