Overnight Subsistence

[TheFaQQer]

Asking my umbrella is not always the swiftest and correct way to get an answer unfortunatley as I know that policies differ from Umbrella to Umbrella ultimately though if HMRC are happy with it your Umbrella cannot refuse it hence my question.

At the risk of adding something on topic.....

You do need to ask your umbrella - you are their employee, and subject to their expenses policy. Your employer may well not allow an expense which would be allowable by HMRC, so you need to ask them.

Also, be wary of being told anything along the lines of "we have a dispensation, so you don't need to keep a receipt". You should claim what you spend (as long as it's an allowable expense) and keep the receipts. Always.

[ASB]

You do need to ask your umbrella - you are their employee, and subject to their expenses policy. Your employer may well not allow an expense which would be allowable by HMRC, so you need to ask them.

An employer does not determine what you can claim; only what they will pay for which is an entirely different thing.

For example my employer might say he won't pay me any business mileage. He might decide he will pay no subsistence whatsoever. He might not pay my profession subscriptions. He might not pay towards home office.

Doesn't stop me claiming any of the above via my SA return.

The only normal expense I am aware of that cannot be claimed through a tax return and must be claimed from employer (if at all) is the £5/£10 pie.

[Wanderer]

Does this mean I allowed to claim a couple of alcoholic drinks with my evening meal

Yes, but see what the limits are that your umbrella allows you to claim. Most likely they will have a dispensation and they will want you to keep your costs within that. Also, the umbrella are your employer so you have to abide by their rules.

[The Spartan]

All very good points I'm glad I posted this question as the replies have given me a lot of food for thought

[KittyCat]

What do you mean 95% compared to 100% & what is the flat rate tax?

It's more to do with how you work, although it's helpful if the contract backs that up. With IR35 investigations they will look at three main factors:

1. Personal Service - if the contract requires you specifically then it is a contract of service and therefore a pointer toward employment. If you can send a substitute then it is a contract for services which cannot then be seen as employment. This is often deemed the strongest argument against IR35, providing it is a genuine right and not merely an ability to offer a substitute.

2. Control - this covers how, when and where the work is carried out. If you have reasonable autonomy over the work to be done then you would be more likely to be seen as a contractor. If you are told what to do and how to do it, and are expected to work set times for a set fee, it is more indicative of employment.

3. Lack of Mutuality of Obligation (MOO) - this relates to whether you are obliged to carry out the work and whether the client is obliged to offer you work, and also whether you are obliged to carry out work outside the scope of the contract. This applies not only after the current contract finishes, but within the current contract itself. MOO is the most difficult one of the three factors to prove, although the MBF Design case in January 2011 was won by the taxpayer with heavy emphasis on this point.

Then you look for supporting factors, things that would support the notion of you genuinely being in business on your own compared to being a disguised employee (notice period, own tools, website, insurances etc). Get your contract reviewed by a specialist, that way they can put all this into context for you and talk you through how your working conditions compare.

Even if you're inside IR35 a limited company can still work out more tax efficient as you can benefit from flat rate VAT, plus only 95% of your income is salary compared to 100% through a brolly.

Curious as to what you actually mean? as I do my own accounts thru ltd - wondered if I'm missing something? for the overnight - you can pretty much claim whats 'reasonable' if your staying away from home - if its receipted - I claim all hotels/meals etc receipted plus the allowed overnight allowance for each night & breakfast/lunch if unreceipted - its all on HMRC website & the're v.friendly if you call them? I agree tho - if your paying an umbrella they should be doing all this for you or should have a dispensation.

[Clare@InTouch]

Curious as to what you actually mean? as I do my own accounts thru ltd - wondered if I'm missing something? for the overnight - you can pretty much claim whats 'reasonable' if your staying away from home - if its receipted - I claim all hotels/meals etc receipted plus the allowed overnight allowance for each night & breakfast/lunch if unreceipted - its all on HMRC website & the're v.friendly if you call them? I agree tho - if your paying an umbrella they should be doing all this for you or should have a dispensation.

If you're with an umbrella then 100% of your income is salary. If you're limited subject to IR35 it's only 95%. HMRC give you a 5% allowance to cover the admin involved in running a limited company, so if your other expenses do not exceed that 5% then there's the chance to pay a small dividend/retain profits.

The flat rate VAT scheme allows you to charge 20% VAT to clients but only pay a flat percentage of your gross sales to HMRC, say 14.5% for IT Consultancy (with a 1% discount in the first year of registration). On £1,000 you'd therefore charge the client £1,200 but only pay £174 to HMRC. You keep the difference. There are turnover restrictions, but you can still gain a few thousand each year.

HMRC are useful (sometimes) if you call them, but they won't offer advice about what you're missing out on or be able to give tax planning advice.

[The Spartan]

I agree tho - if your paying an umbrella they should be doing all this for you or should have a dispensation.

When I contacted them they told me that though some items can be unreceipted you still have to keep the receipts for them.

[Waldorf]

When I contacted them they told me that though some items can be unreceipted you still have to keep the receipts for them.

My accountant told me that the only expenses that receipts are not expected by HMRC are the overnight allowance of £5/night and my mileage claims.

[malvolio]

My accountant told me that the only expenses that receipts are not expected by HMRC are ....my mileage claims.

...and only if you keep a log of journeys made.

[The Spartan]

My accountant told me that the only expenses that receipts are not expected by HMRC are the overnight allowance of £5/night and my mileage claims.

I believe it comes under their dispensation