Clarification on subsistence

**malvolio** · 22 December 2005, 00:30

1. Get a better accountant, or at least get one that explains what's going on. They work for you, remember, not the other way round, and if you have to cross-check their answers than (a) they aren't doing it right and (b) you haven't learned the rules yourself yet. That said, if you spend money that you would not have spent if it wasn't to do with your work, it's claimable. End of discussion. There is a minor change after two years at the same location, but that's 23 months away yet.

2. Ignore umbrella's descriptions of what is and isn't allowable. They use their rules for their "employees", which you aren't. Some of them use rules that are not actually supportable if challenged.

3. Learn what the rules are about IR35-caught contracts. ISTR explaining the basics not two days ago in here to someone else. Then decide whether or not you are caught.

4. If you are inside IR35 (which is unlikely but I'm not going there at this time of night), you take gross income for the contract, deduct expenses which include professional fees, pension payments and business expenses but not training, knock off 5% and what remains is your deemed income. Hey, your accountant does know something after all...

5. Hint - the time to decide your IR35 status is before you take the gig. You can't change your mind: actually you can, but you might have to defend your decision to do so with Hector, which may be tricky.

6. I seem to remember advising you to read the CUK and PCG guides a while back. Have you? Did you understand them?

7. Contracting is not a game, it is a life choice. It is a satisfying way to work and it's a damn sight harder than being a permie. Keep the fun side firmly in view, but make sure you really understand all that's going on around you. Asking intelligent questions is a good sign, BTW...

**planetit** · 22 December 2005, 08:23

Originally posted by malandri

Something else that confuses me more is that my accountant, despite my contract being inside IR35, insists that the fees i pay to him can directly come out of my business account, which i thought i could do only if the contract was outside IR35

Your accountant is right about this. The 5% allowance in the deemed salary calculation is to cover this sort of expense.

**lORD lUCAN** · 22 December 2005, 08:38

Subsistence

Try £25 per day for subsistence, still the over 10 hr rule applies.
360 Group, not the brightest but still haven't found anyone to match them
on allowances yet.

**expat** · 22 December 2005, 09:05

As a minor aside (Malvolio having as usual covered it with a competent synthesis), is it not the case that umbrella "dispensations" from the IR/HMRC are dispensations on the amount and type of documentation normally required, not on the allowances themselves?

In plain words, in or out of a brolly you get the same allowances. In the brolly you just need to show a bit less paper?

**xoggoth** · 22 December 2005, 10:38

Don't quite see it is correct according to the IR's booklet but several contractors I have spoken to have told me that their acountants advise them to claim the maximum £5 PIE allowance each day. Maybe such a small amount will not be queried. Anyone else been so advised by accountant?

PS Zeithghost. PIEs are for unreceipted claims AFAIK. You just need to keep a log to justify. Would think a challenge on PIEs unlikely as they are so small.

**ASB** · 22 December 2005, 11:00

Xog,

Yes, no problems. It amounts to a sandwich and a coffee or similar really. I'd claimed a small incidental allowance for the past 20 odd years. Yes it's been through an investigation.

However to pre-empt malvolio :-) , strictly you do need to be able to prove all expenditure (that doesn't mean receipts in actual fact).

An inspector may allow a small daily allowance, or he may not. Generally you will at the least need to convince them it's reasonable. I don't think there is an ESC for it although there might be.

In practical terms it is impossible to get receipts for all small purchases, and an inspector knows this.

But.....

Some inspectors have been known to take an extremely firm line with this sort of thing. There has been at least one case where employees have been charged BIK on sandwiches provided for a lunctime meeting (although he may have relented in the end). Didn't apply to the externals visiting though.

**Bradley** · 22 December 2005, 11:17

PIEs

Despite the acronym PIEs are not primarily for food or drink. Food and drink are really subsistence and the PIE is something else completely. The PIE's for things like a paper first thing in the morning, a can of coke or snack (not a meal), a call home, a video rental - basically any expenses you incur whilst necessarily staying overnight to be closer to the client site.

**Biker Boy** · 22 December 2005, 11:34

Here is an Umbrella one sent to me;
http://www.prosperity4.com/common/pd...sations_lr.pdf

**expat** · 22 December 2005, 12:10

Originally posted by Biker Boy

Here is an Umbrella one sent to me;
http://www.prosperity4.com/common/pd...sations_lr.pdf

Do the per diem rates (without need of receipt) apply also to those with their own Ltd Co?

Clarification on subsistence