P4, NoLongerLimited, ParasolIT?

[IR35 Avoider]

From the "Myths and Facts" section of contractorumbrella web site

Fact: A subsistence payment is, by definition, one that does not have to be supported by receipts. The only subsistence payment permitted by the Inland Revenue is £5 per night (£10 if abroad) for each night spent away from home during the course of the contract. All other expense claims must be supported by receipts according to Inland Revenue legislation.

Their web-site is so comprehensive in telling you what you can't claim that I'm really impressed - I hereby switch my preference if I ever decide to use a brolly from Parasol to ContractorUmbrella. (Though in reality it wouldn't cross my mind to make money out of expenses, so both would be equally good for me.)

For me who believes all future income is likely to be IR35-caught, the biggest drawback of current brollys is that you have to use their group pension scheme - they're not willing to take on the admin of contributing to each contractors chosen scheme. I suspect they will have to think again next year when new pension rules mean people like me can bung virtually all our earnings into our pension and pay no tax or NI at all on any of our contract income. We will want the money to go to a scheme of our choice, possibly a SIPP.

[absoft]

ParasolIT Subsistence

So are you all saying in effect that the 10,000+ contractors with ParasolIT are going to get fined by 'Hector' for claiming the subsistence against tax which Parasol says they can? If you are correct there would be a lot of unhappy Parasol Clients. I notice No Longer Limited also lets its contractors claim subsistence. Surely this should all be sorted out and made clear one way or the other; there seems such a lot of grey areas in contracting!

[malvolio]

It's not that grey, really. If Parasol are willing to pay you £15 a day unreceipted, why is that a problem? All you have to do it declare it on your SA form as business expenses received. Hector may then tax you on it as BIK or he may not - if it's not extravagantly outside his guidelines, he probably won't.

However, unreceipted or not, you should only get it for each day you're working away from home. You don't get money just for being a contractor (I wish).

Or, repeat after me (and a load of other people) "run your own company and decide your own income"

[Bradley]

Re:contractorumbrella

Payment of the incidental expenses allowance can only be authorised if there are receipts.

[malvolio]

So how do you get a receipt for a per diem expense allowance - one for the coffee, one for the paper, one for the phone call home...??

The point is that Hector realises there is a cost for these minor incidentals incurred by working away from home (he has to, it's enshrined in all the Civil Service pay schemes, so he can't deny it to the real world) and that a reasonable amount of money can be paid each day (hence "per diem") to cover such expenditure, typically £5 for a day out, plus £10 if you stay overnight. It used to be called "beer and skittles" money, BTW

[rooney]

Subsistence

To be fair to Parasol they don't actually sell their service on expenses like some umbrella companies do. This is taken from their site:

Parasol PLC operate a very attractive expenses policy that enables consultants using Parasol PLC's NetPay scheme to claim genuine business expenses in accordance with Inland Revenue Schedule E guidelines. Parasol PLC does have an expense dispensation from the Inland Revenue and this helps streamline the processing of claims and year end reporting. It does not provide carte blanche to claim lots of expenses without receipts, which some umbrella companies advertise as a sales "feature".

[Bradley]

So how do you get a receipt for a per diem expense allowance - one for the coffee, one for the paper, one for the phone call home...??

The point is that Hector realises there is a cost for these minor incidentals incurred by working away from home (he has to, it's enshrined in all the Civil Service pay schemes, so he can't deny it to the real world) and that a reasonable amount of money can be paid each day (hence "per diem") to cover such expenditure, typically £5 for a day out, plus £10 if you stay overnight. It used to be called "beer and skittles" money, BTW

You can get receipts for most of what you've identified. You have to do it because you may stray into paying more than £5 on average in which case the whole amount becomes taxable. The incidental overnight expenses allowance as it is more properly called is not a defrayment of expenses but a maximum that can be paid. See http://www.hmrc.gov.uk/manuals/eimanual/EIM02730.htm for more detail.

[absoft]

[QUOTE=malvolio]It's not that grey, really. If Parasol are willing to pay you £15 a day unreceipted, why is that a problem? All you have to do it declare it on your SA form as business expenses received. Hector may then tax you on it as BIK or he may not - if it's not extravagantly outside his guidelines, he probably won't.

What I am saying is why does ParasolIT (and also No Longer Limited) say I can claim £15 per day unreceipted because I am away from home for >10 hours when ContractorUmbrella on the other hand say I can't claim it? That is why its 'grey'; I don't know who to believe or whether I am allowed £15 tax free or not. If ParasolIT let me claim it, it is a problem if their advice happens to be incorrect and I end up with a fine; thats why its a problem !

[boredsenseless]

You can claim that amount unreceipted - in fact you can claim anything you like without receipts!!

The problem comes if HMRC get interested since they require proof you spent the money. This is usually in the form of receipts but can be anything such as a bank statement, empty sandwich box or even the shops CCTV if needs be.

The simple answer is if you haven't spent it don't claim it. If you can't prove it don't claim it

[absoft]

£15 per day or £5 overnight?

The point I am trying to make (maybe not very well) is that ParasolIT say I can claim £15 per day for every day I work away from my house for more than 10 hours. ContractorUmbrella say I can claim only £5 and to do that I have to be away overnight ! Only one of them is right; which is it?