self employed and re-chargeable expenses

[chef]

a friend of mine (and no its not me before you ask, im in germany and have never worked for this client before) has taken the frankly stupid step, given the current climate, of becoming a contractor but has managed to secure a gig with his previous employer as self employed.. obviously he's caught out by IR35 but as he's self employed that is kind of irrelevant..

they are paying his expenses (travel to london & hotel) and he adds a line to his invoice for these..

question he's asked me is:
can he therefore claim these expenses as tax deductable as they are effectively a business expense, otherwise he would be paying tax on "earnings" that are effectively part expenses..

i have no idea and told him to get and ask an accountant but thought I'd put it to the panel.

[Spacecadet]

he'll probably be breaking the 2 year rule, depends how long he was working there before hand

[Alan @ BroomeAffinity]

If he adds the expenses to his invoices it ups his turnover but the expenses as incurred will come off his profits so there will be no change in the profit.

When you say he has taken a position as self-employed and therefore IR35 doesn't apply, what do you mean?

[chef]

he'll probably be breaking the 2 year rule, depends how long he was working there before hand

good point, he worked at some other company as self employed contractor for a short while but he was a permie at his old clientco for several years before turning self employed contractor.. although since contracting he's only spent 2 months at client co and it's only likely to be a 9 month gig.

If he adds the expenses to his invoices it ups his turnover but the expenses as incurred will come off his profits so there will be no change in the profit.

When you say he has taken a position as self-employed and therefore IR35 doesn't apply, what do you mean?

the expenses incurred coming off profits is effectively answering his question, thanks.

I added the bit about IR35 as he is registered as self employed and not as a limited company and therefore doesnt take small wage and big dividends, there is no shares to claim dividends from, he claims all profits as income and pays PAYE on it, i.e as though he was caught by IR35... or that's what i assume he's doing.

[Alan @ BroomeAffinity]

Interesting that he's self-employed. I preume there's no agency involved as they would be obliged to tax him as PAYE if not a Ltd Co.

[chef]

Interesting that he's self-employed. I preume there's no agency involved as they would be obliged to tax him as PAYE if not a Ltd Co.

no, no agency involved he's just a lucky g#t who has managed to find work with his old employer and thinks "this contracting lark is easy.. more money for doing less than i used to"

scary thoughts if he knew what was coming next year and there's no work around.. wouldn't listen to my advice and has jacked in his comfy permie position in search of riches.

thanks for the advice though..

[pleomax]

Why what is coming next year? Sorry am i being really niave?

[Bunk]

Why what is coming next year? Sorry am i being really niave?

Apparently there's much doom coming next year.