Billable expenses being Taxed?!?!

[Horby]

Hi all, (only contracting 4 months)

I use a composite company.
When i get my pay slip my billable expenses are shown as an hours pay in my topline, as such they are being taxed.
I queried this and they told me the following;

"You must claim the billable expenses (duplicate them)on a claim form from your Company in order to avoid the Billable expenses falling into profit and being taxed"

Is this normal practices, for what reason could they want it doing this way? am I getting stiffed?

any help would be much appreciated...

[malvolio]

Have you thought about asking the brolly? How are you claiming them anyway - if you lump them in with your hours, then they will get taxed as income. You need to claim them separately from time worked, and surely even the dimmest brolly company has a way for you to do this on the timesheet. Unless of course you're with one of those who treat expenses as tax-free income regardless..

Four months in - you need to start researching how to do it properly via a LtdCo, ready for your next contract. You know it makes sense!

[Cowboy Bob]

Hi all, (only contracting 4 months)

I use a composite company.
When i get my pay slip my billable expenses are shown as an hours pay in my topline, as such they are being taxed.
I queried this and they told me the following;

"You must claim the billable expenses (duplicate them)on a claim form from your Company in order to avoid the Billable expenses falling into profit and being taxed"

Is this normal practices, for what reason could they want it doing this way? am I getting stiffed?

any help would be much appreciated...

Firstly, using a composite you're asking for a very large tax bill in the future when Gordon Brown makes them illegal, but I'll leave others to berate you for that.

Secondly, yes you do have to specifically claim billable expenses. They go through your company books differently from regular company income. But then, if you had done even a cursory investigation before you started contracting you'd already know that.

[Horby]

I submit a mileage claim form to my 'brolly' every ,this details which is billable and non billable mileage. Any other billable expenses (hotels etc) are also put through on one of their claim forms. Is this not correct?

[malvolio]

Who knows? It's your company, theoretically. It sounds right, but obviously something is going wrong in the comp's accounting department. You're paying for their services, get them to explain why they're taking tax out of your expenses. Then, as Bob, says, look for a more sensible way to run your life.

[Horby]

I'm in the process of questioning what they are doing that's why I came on here for the comments of others to make sure I was not barking up the wrong tree.

I have just spoken to others using the same 'brolly' who are having the same problem, maybe the threat of a mass exodus may spur them to rectify it. In the meantime would I be stabbing myself in the foot if I were to highlight this issue to the local TAX office?

[malvolio]

Maybe, maybe not. They're getting more tax, remember (sudden thought - assuming the comp is passing it on, of course... ). Trading Standards may be a good first port of call though.

[tim123]

Firstly, using a composite you're asking for a very large tax bill in the future when Gordon Brown makes them illegal, but I'll leave others to berate you for that.

The clamp down on composites has been coming for the last twenty years. Why should this one be any different?

(But as a first timer, is the guy really using a managed services company?)

tim

[Horby]

The 'managed service' company gave me a LTD Company name, I am sole director of my company (checked at companys house) though my companies registered address is at the managed service companie address. My company is also VAT registered.

I am also the sole employee of my company.

I pay a fee for pay and expense processing to them every week, they provide me with a payslip and pay my salary and directors dividend into my personal bank account every week. There is no 'company' account.

WHat this type of set-up is known as has been the subject of debate once before on these boards, no one came up with a difinitive answer at that time.

When I was offered this contract I only had 48hrs to decide on which way to go, and basically went with the 'Managed Service' comapny reccomended by the recruitment agency.

[MrsGoof]

When I was offered this contract I only had 48hrs to decide on which way to go, and basically went with the 'Managed Service' comapny reccomended by the recruitment agency.

Why did you have to set it all up so quickly?

In my first contract I had the agency asking where to send the money (after only 1 week) as I was still in the process of setting up Ltd, Bank Account, Vat, PAYEE....

It sounds like you need to the brollie and sort out another option all at the same time. Next pay shold be sent from Agency to another brollie or your new Ltd.