Client Paid Expenses / IR35

[lordylordy]

Hi there,

Have been lurking around here for a few months now, having made the leap into contract land about 2 months ago. The information I have found on the forum has been invaluable in getting my LTD company going and giving me the information that I need, so thankyou for that. Just for info, I am involved in engineering consultancy type work in the nuclear industry.

Just got a couple of expenses based queries that I can't seem to find exact answers for, having done a search.

Current contract is based at the client head office, which is 150miles from home. As such I claim travel and temporary accomodation costs etc from my Ltd Co. No problem there.

It is occasionaly necessary for me to visit and work from other client sites, for which I am able to claim travel, accomodation and food expenses from the client, on top of my day rate. As some weeks this can mean upto 1000 miles of driving, my intention was to occasionally use a hire car provided by the company, and occasionally use my own car (when it suits due to relative locations of client sites/weekends away etc.)

Based on some discussion with my accountant, I have a couple of points that I would like your collective advice on:

1. Is using a company provided hire car likely to cause IR35 issues? My accountant suggests that this is in indicator of employment so is a bad idea, but I am unsure of the logic in this. Either the client pays 40p a mile for using my own car, or they provide me with a hire car and it is my choice which I go for. Incidently, this issue was flagged by my accountant because my claim included some fuel for the company provided hire car.

2. If I decide to use my own car rather than a hire car, does the mileage my ltdco charges the client count towards my ltdco 10k@40p mileage allowance? I suspect that if I want tax relief on this, then the answer is yes, which is why I thought using a hire car would be beneficial as I will eat up 10k miles pretty quickly.

Sorry about the long post! Just wanted to try and give enough info. I look forward to your thoughts.

[Lumiere]

1. Does not look good to me at all. I think it is the same as tools/hardware, better if it is your own company's.

2. Whatever you agree with the client, 20ppm x 10K miles or 80ppm unlimited, the 10K limit only applies when you claim mileage from your Ltd Co. Some companies new to contractors may be confused about this though and insist on 40ppm x 10K. Think of mileage you claim from the client as of an extra service charge added to the invoice.

[northernladuk]

Hi there,

1. Is using a company provided hire car likely to cause IR35 issues? My accountant suggests that this is in indicator of employment so is a bad idea, but I am unsure of the logic in this. Either the client pays 40p a mile for using my own car, or they provide me with a hire car and it is my choice which I go for. Incidently, this issue was flagged by my accountant because my claim included some fuel for the company provided hire car.

Sorry about the long post! Just wanted to try and give enough info. I look forward to your thoughts.

Best thing to do with expenses is pay for it yourself and invoice the client for it. You can supply a copy of the reciepts to prove they are legitimate, there is nothing wrong with that. He is just checking the work has been done, like a time sheet. You even make a couple of % on the VAT if you are on teh FRS as well !!!

[lje]

Best thing to do with expenses is pay for it yourself and invoice the client for it. You can supply a copy of the reciepts to prove they are legitimate, there is nothing wrong with that. He is just checking the work has been done, like a time sheet. You even make a couple of % on the VAT if you are on teh FRS as well !!!

Remember though that any expenses you invoice to the company will have to have VAT added to them (even if they already have VAT charged).

As others have said - the 10k 'limit' is only applicable to you claiming mileage from your ltd co. You ltc co can claim mileage at any rate agreed with the client co.

[lordylordy]

Thanks for the advice. I am now clear about how the mileage allowances work. I think the use of a company paid hire car is probably more arguable, as with many things IR35 related, but it's probably just best to avoid any likelihood of problems though.

As an alternative, the client has suggested that they issue me with a corporate credit card, which I am pretty sure would be an even bigger indicator of employment (though it would probably superficially "hide" such expenses).

Thanks again.