Travel and Subsistence whilst living abroad but contracting in UK

[blackfriar]

Within the next month or so I’ll be relocating myself and family to the hills of Austria. We’re drawn there by a passion for skiing and outdoors lifestyle having done many long trips to the alps over the years. I’ve been contracting in software development for over 20 years in the UK, I’m a UK citizen and have been resident here permanently. My intention is once settled in Austria is to keep doing the freelance gigs with the possibility of commuting once a week back to the UK, most probably London.

I operate through my own UK registered limited company. Question is would travel and subsistence (hotels, short term let) related to flying back to the UK be allowable business expense?

I’ve so far had very conflicting advice from two tax specialist. So seeking information from anyone else that may have been in a similar position. One advisor sees no issue what so ever whilst the other has said the HMRC would see that it’s my personal choice to live outside the UK and hence it’s unreasonable that travel and subsistence for a client based in the UK is allowable.

My counter to this is that I could move to the far north of Scotland and have a London based client and in that circumstance travel and subsistence expenses would be fine. Also when I next look for a new contract I’ll be willing to consider work over most of Europe, though as I know the UK market and have limited non-english language skills then the UK is most likely location for a new contract. The irony is my current commuting cost (train) probably cost more than a weekly flight and a few nights in a hotel. Anyone else been in this position?

Thanks

[Craig@Clarity]

Like you say, it makes no difference to whether you it's Scotland or Austria. I think it comes down to whether it qualifies as a temporary workplace or permanent.

[BlasterBates]

The way I understand it your Ltd will have to be registered in the UK, and wherever it is you'll be able to claim expenses, so one way round this would be to locate it in the North of Scotland and claim expenses from there.

You can register a branch of your Ltd in Austria, but there's no point because that would only be relevant if you were doing business in Austria and everything would be taxed there.

I don't see how HMRC would accept a foreign address, and then they would just assume your place of work as where the Ltd is located.

[northernladuk]

If you lived and worked in Austria but wanted to fly back to England would that flight fulfil the wholely and exclusively for business purposes? I would say not in the example you pose. You would fly back to England for personal reasons.

Now if you re-worded that and said you were in England and had to fly to Austria to work that might be a different situation. Thing is your family and your 'home' are in Austria so doesn't really apply so back to option A above you are flying back to the Uk for personal reasons not business.

That's how I would interpret that. You could try pull the wool over HMRC's eyes and argue you still live in UK but temporarily stay in Austria to work you might get away with it but looking at the explaination you give that would be closer to a bare faced lie than pulling wool.

I think if you want the perks of living in Austria you are gonna have to come clean and just swallow the costs...

[NotAllThere]

Your company is based in the UK, so will be subject to tax there. You are likely to be resident in Austria and the UK, for tax purposes (too many days in the UK), so you'll need to fill in two tax returns. I cannot see there being any issue whatsoever with your claiming the expenses of your flights and accomodation while working in the UK, so long as you are within the two year rule. Austrian tax, if it's like any other continental European regime, will be quite happy with it as well.

Working as you propose to do is not common, and is very much a grey area. I doubt you'll get any legal expert who really knows for sure.

I used to live in England and work in France (weekly commute), and neither tax authority had a problem with my claiming T&S expenses.

[SueEllen]

The way I understand it your Ltd will have to be registered in the UK, and wherever it is you'll be able to claim expenses, so one way round this would be to locate it in the North of Scotland and claim expenses from there.

You can register a branch of your Ltd in Austria, but there's no point because that would only be relevant if you were doing business in Austria and everything would be taxed there.

I don't see how HMRC would accept a foreign address, and then they would just assume your place of work as where the Ltd is located.

Confused by this explanation as you are stating that someone who uses their accountant as the registered office of the company based in Scotland they are director/company secretary and employee off, cannot claim travel expenses from their home in England.

The only real thing the OP needs to check is whether:
a. The company needs to be registered at a UK address, and/or
b. Needs some directors resident in the UK (and do all board meetings in the UK( to claim that the company is UK resident,
to avoid Austrian corporation tax.

[LisaContractorUmbrella]

Not surprised tht you cannot get a conclusive answer on this one - pretty grey area. My feeling would be that HMR&C would say that you have chosen to relocate to Austria (where presumably you could find work) and that it is your choice to return to the UK to work; in which case the cost of the travel would not be allowable as an expense.

[Craig@Clarity]

I would say that HMRC would disallow the relocation costs (if you were thinking of claiming it) as it is your choice where to live as Lisa said, but as far as claiming travel costs from your home to work from Austria, it is allowable provided you are non-dom etc. There's some guidance here Travelling expenses: employees working but not domiciled in the United Kingdom: travel between the home country and the United Kingdom

Here's another link if you are thinking what determines your domicile HM Revenue & Customs: Residence and domicile issues

[BlasterBates]

Confused by this explanation as you are stating that someone who uses their accountant as the registered office of the company based in Scotland they are director/company secretary and employee off, cannot claim travel expenses from their home in England.

The only real thing the OP needs to check is whether:
a. The company needs to be registered at a UK address, and/or
b. Needs some directors resident in the UK (and do all board meetings in the UK( to claim that the company is UK resident,
to avoid Austrian corporation tax.

No you can claim from your home, because your home can be your place of work. I was just tossing the idea in the air you could legitimately argue you were based at your HQ say in Scotland, but it wouldn't be possible unless you actually did travel from there, so it was a non-starter. But I can't see them accepting that you can claim from a foreign country, unless you really do open a branch of your Ltd in Austria...then it might be possible. As has been said HMRC want to see a business reason, i.e. you are near your place of work, but your place of work can legitimately be your home anywhere in the UK if you're a "roaming" consultant, because your work could be anywhere in the UK, but it certainly couldn't be Austria unless you opened a business there.

I suppose however there's no harm in trying, find an accountant who thinks it is possible and just try. Hotel costs ought to be easier, if you have family in the UK you could use their address as your home.


The Austrian alps is a great place though wouldn't let the expenses put you off.

[SueEllen]

No you can claim from your home, because your home can be your place of work.

Not according to the examples in this (if you are entirely UK based) - http://www.hmrc.gov.uk/helpsheets/490.pdf

The accountants have explained the rest.