subsistence whilst contracting via ltd

[LisaContractorUmbrella]

It's no good trying the old charm offensive on me Mr Volio

[Craig@Clarity]

you cannot claim expenses for meals in this situation as it is not an additional cost that you have incurred because of the contract. Presumably there is no reason why you can't eat breakfast before you leave home???

Why not? This is assuming he is working through his own PSC which has just been set up, so as an employee working through his own company at a temporary workplace, he can claim subsistence. Obviously he can't claim breakfast or lunch if he makes it at home and takes it to site. Am I missing something?

[malvolio]

Why not? This is assuming he is working through his own PSC which has just been set up, so as an employee working through his own company at a temporary workplace, he can claim subsistence. Obviously he can't claim breakfast or lunch if he makes it at home and takes it to site. Am I missing something?

Several things, perhaps?

1. He can claim for breakfat, dinner, morning coffee and a shoeshine if he wants. That doesn't mean he doesn't have to pay BIKs on that income. Since he's commuting, they fail the "wholly and exclusively" test

2. It's not subsistence; that has a specific meaning despite being used by contractors (usually ex-brolly users) to mean meal expenses. Subsistence is effectively extra pay to cover out-of-pocket living expenses so you don't have tio use earned income to cover your employer's costs: these are genuine business costs to HisCo. OK, it's a pedantic point, but accuracy is necessary to prpoer understanding.

3. While nobody is out to pay any more tax then necessary, it is an equally bad idea to try and screw every last penny you can out of the tax system. Firstly it doesn't actually get that much extra money. Secondly, the aim is to work as a genuine business. Genuine businesses do not put their emplyees tax position at risk by giving them money they are not actually entitled to. The risk/reward ratio is all wrong.

4. If the OP desn't understand these basic concepts, what else doesn't he understand?

HTH

[platforminc]

Why not? This is assuming he is working through his own PSC which has just been set up, so as an employee working through his own company at a temporary workplace, he can claim subsistence. Obviously he can't claim breakfast or lunch if he makes it at home and takes it to site. Am I missing something?

Sometimes I have to be at site quite early in the morning as I'm doing the morning shift, which deosnt give me enough time to make breakfast or else I will be late. Also in the evening, I may be required to stay over a little bit. I found malvolio unnecesarily aggressive, I just came here to ask a question as I previously used an umnbrella, not to be told that I am tryingt to evade tax, what kind of mindset is that.

[Craig@Clarity]

1. He can claim for breakfat, dinner, morning coffee and a shoeshine if he wants. That doesn't mean he doesn't have to pay BIKs on that income. Since he's commuting, they fail the "wholly and exclusively" test

I would agree if he was a permie or at a permanent workplace, however, in his circumstance, based on earlier assumptions and referring to Travel expenses: travel for necessary attendance: definitions: ordinary commuting it states:

"No deduction is due under Section 338 ITEPA 2003 for the cost of ordinary commuting. For most employees, ordinary commuting is the journey they make most days between their home and their permanent workplace."

So lets assume he works at a temporary workplace, referring to EIM32075 - Travel expenses: travel for necessary attendance: definitions: temporary workplace it mentions:

"A workplace is a temporary workplace if an employee goes there only to perform a task of limited duration or for a temporary purpose. So even where an employee attends a workplace regularly, it will be a temporary workplace and so not a permanent workplace, if the employee attends for the purpose of performing a task of limited duration or other temporary purpose."

As such, under business travel HM Revenue & Customs: Travel - general :

"As well as including transport costs, the 'necessary costs of business travel' also include:
subsistence costs, such as meals
accommodation if the travel requires an overnight stay"

[Craig@Clarity]

P.S.

Specific HMRC example:
Travel expenses include the actual costs of travel and also the subsistence expenditure and other associated costs that are incurred as part of the cost of making the journey.
The cost of business travel includes
• The cost of any necessary subsistence costs incurred in the course of the journey
• The cost of meals necessarily purchased whilst an employee is at a temporary workplace.

Travel expenses: general: accommodation and subsistence: include associated subsistence

[malvolio]

Sometimes I have to be at site quite early in the morning as I'm doing the morning shift, which deosnt give me enough time to make breakfast or else I will be late. Also in the evening, I may be required to stay over a little bit. I found malvolio unnecesarily aggressive, I just came here to ask a question as I previously used an umnbrella, not to be told that I am tryingt to evade tax, what kind of mindset is that.

I'm not agressive, just impatient. And you still need to understand the baiss of the rules you're trying to apply.

Avoidance good, evasion bad:that's the golden rule.

The logic that the taxman uses is that you still have to eat, so why does a given meal suddenly become claimable just because it's inconvenient? You can make something the night before to take with you, for example, or you can get up half an hour earlier. It's a business expense if it's wholly and exclusively incurred in the line of buiness, and if it qualifies n that score, the repayment to you is not taxable (there's a bit of a daisy chain explanation as to why that I won't try to explain right now!). In yuor case that doesn't work.

So you can claim the expense, but you will have to declare it on your P60 and pay the BIK on it since it is treated as earned income (whic it is). Not doing so actually is evasion, so don't get so precious about it.

However, if you're staying away from home, you can't realistically make it yourself so it is a genuine business expense and not a BIK. Well, for two years, but let's not go there

Clear?

[malvolio]

P.S.

Specific HMRC example:
Travel expenses include the actual costs of travel and also the subsistence expenditure and other associated costs that are incurred as part of the cost of making the journey.
The cost of business travel includes
• The cost of any necessary subsistence costs incurred in the course of the journey
• The cost of meals necessarily purchased whilst an employee is at a temporary workplace.

Travel expenses: general: accommodation and subsistence: include associated subsistence

Correct. But now define "necessarily"...

[Craig@Clarity]

Correct. But now define "necessarily"...

Section 338 should provide the answer Income Tax (Earnings and Pensions) Act 2003

[LisaContractorUmbrella]

Sometimes I have to be at site quite early in the morning as I'm doing the morning shift, which deosnt give me enough time to make breakfast or else I will be late. Also in the evening, I may be required to stay over a little bit. I found malvolio unnecesarily aggressive, I just came here to ask a question as I previously used an umnbrella, not to be told that I am tryingt to evade tax, what kind of mindset is that.

I don't want to sound uncaring but basically HMR&C's approach would be 'why can't you get up earlier?'

And also:

BIM37660 - Wholly & exclusively: duality of, or non-trade, purpose: non travel topics: subsistence
Cost of food or drink, taken in whole or in part for sustenance, is not allowable
The cost of food or drink consumed for the human requirement of sustenance is not allowable. It does not matter that work occasions a greater appetite or causes greater expense. The expenditure is at best dual purpose. There is no mechanism to allow an apportionment to give a ‘business’ proportion or the ‘extra cost’ imposed by the business. The whole cost is disallowed.

In the case of Caillebotte v Quinn [1975] 50TC222, Quinn was a sub-contract carpenter, working on sites within a 40-mile radius of his home. When working, Quinn could not go home for lunch and bought one at an average cost of 40 pence, compared with an estimated cost of 10 pence for a light lunch at home. Quinn attributed the additional cost to the need to eat a more substantial meal in order to maintain the energy expended in carrying out physical work and to keep warm during the winter. The General Commissioners allowed the additional cost as a deduction from Quinn’s profits under Case I of Schedule D.

Templeman J said that the taxpayer ate to fulfil the human need for sustenance; Quinn ate to live, and not because he was a carpenter. Moreover the attempt to apportion the expenditure pointed out the essential duality of purpose. Templeman J distinguished the cost of food consumed by a carpenter from the cost of food consumed by actors during the course of a performance. There is no deduction where the purpose of consuming food is the human need for sustenance even if that need is increased by the greater exertions required to carry on the trade or profession in question.

Templeman J stresses that the taxpayer’s attempt to apportion the expenditure highlighted its fatal duality.