Subsistence

[MarillionFan]

What does everyone do for this on VAT Returns. I always add up all the receipts I have but it takes for ever, or do you just do £5 per day?

 

[malvolio]

MF - "Hey, Mr ExciseMan, I really can't be arsed to keep proper records or do all that tedious paperwork, so can I just pay you the first number I thought of and hope it's about right?"

Your client - "Hey, Mr MF, thank you for your work for us last month, we didn't bother reading your timesheets or know how much you did, so here's £230 - we think that will cover it."

Which one is the better approach do you think? Hint: the first one puts you in jail for fraud...

 

[MarillionFan]

Malv. Its just I keep seeing threads popping up about certain umbrella companies saying they have dispensation.ie. Giant

A contractor I know is putting in £25 per day expenses on the word of his umbrella company withot receipts. I thought this was bollocks but he is convinced it is correct and I have seen posts on here doing the same.

So what is it?

 

[Gonzo]

What does everyone do for this on VAT Returns. I always add up all the receipts I have but it takes for ever, or do you just do £5 per day?

Flat rate scheme for VAT.

By my back of a fag packet calculations* if your expenditure is less than about 11% of turnover then you will be financially better off being in this scheme as well as not having to bother adding up the receipts for your expenditure for VAT purposes.

* assuming turnover is less than £150,000 and you can apply for the scheme and you fall into the 13% band for Computer and IT Consultancy.

Usual disclaimer - IANAA etc etc.

Who gives you a VAT receipt for your lunch in any case?

 

[MarillionFan]

"Who gives you a VAT receipt for your lunch in any case?" - The canteen

 

[Gonzo]

"Who gives you a VAT receipt for your lunch in any case?" - The canteen

OK. I have never had to develop the habit of always asking for a VAT receipt because of the flat rate scheme - and I don't expense my lunch to my company. From comments on this board it seems that Umbrella companies suggest that you can do this but I am a bit dubious about being able to claim for subsistence unless you are staying away from home overnight.

 

[malvolio]

Malv. Its just I keep seeing threads popping up about certain umbrella companies saying they have dispensation.ie. Giant

A contractor I know is putting in £25 per day expenses on the word of his umbrella company withot receipts. I thought this was bollocks but he is convinced it is correct and I have seen posts on here doing the same.

So what is it?

Things to remember #1: The umbrella is a service organisation, not a source of advice and guidance or, in many cases, even good practice

Things to remember #2: If you screw up, you get fined, not them. They don't care.

You may not need receipts to give to the umbrella, that's up to them (and it's your money they're spending so they also don't care) and they won't have to provide receipts to the taxman when they pay off their VAT bill. That's why they have the dispensation: it's nothing to do with you.

However, you will have to prove the expenditure if you get audited for VAT, so you need to keep the receipts for everything you have claimed. Fail to do so and (a) they will make an assessment of what you owe, (b) you will be fined (or worse) and (c) you will find youself in the middle of an IR35 investigation just for fun.

Even under the flat rate scheme you should keep an audit trail, even if you don't have to account for it.

 

[Mordac]

Malv. Its just I keep seeing threads popping up about certain umbrella companies saying they have dispensation.ie. Giant

A contractor I know is putting in £25 per day expenses on the word of his umbrella company withot receipts. I thought this was bollocks but he is convinced it is correct and I have seen posts on here doing the same.

So what is it?

Stop winding the boys up, no-one is ever going to believe someone could be so stupid as to believe that, even you...

 

[hattra]

Things to remember #1: The umbrella is a service organisation, not a source of advice and guidance or, in many cases, even good practice

Things to remember #2: If you screw up, you get fined, not them. They don't care.

You may not need receipts to give to the umbrella, that's up to them (and it's your money they're spending so they also don't care) and they won't have to provide receipts to the taxman when they pay off their VAT bill. That's why they have the dispensation: it's nothing to do with you.

However, you will have to prove the expenditure if you get audited for VAT, so you need to keep the receipts for everything you have claimed. Fail to do so and (a) they will make an assessment of what you owe, (b) you will be fined (or worse) and (c) you will find youself in the middle of an IR35 investigation just for fun.

Even under the flat rate scheme you should keep an audit trail, even if you don't have to account for it.

I think its the directors of a company that carry the can for improper accounting - in my case (still using Giant, cos I can't be bothered to do the paperwork) I'm not the director, though I am the sole shareholder. Somebody in Giant is the director of "my" company, so it's in their interests to get it right. Giant keep all the receipts - I just keep copies, since THEY are the ones who have to prove anything to HMRC

On the unreceipted expenses bit, they claim to have an agreement with HMRC that certain amounts are "de minimis" and don't need receipts - it sounds reasonable, as I had exactly the same thing in my permie days - we were allowed to claim hotel expenses, up to a certain maximum, and £10 - 15 a day, without receipts, for meals and incidentals - you could claim more for meals if you had receipts to prove that you'd spent more (again there was a limit).

 

[Lucifer Box]

On the unreceipted expenses bit, they claim to have an agreement with HMRC that certain amounts are "de minimis" and don't need receipts - it sounds reasonable, as I had exactly the same thing in my permie days - we were allowed to claim hotel expenses, up to a certain maximum, and £10 - 15 a day, without receipts, for meals and incidentals - you could claim more for meals if you had receipts to prove that you'd spent more (again there was a limit).

Sorry, but this is just so wrong. See the accounting forum for the innumerable threads discussing this. Anyone who cannot produce receipts or other proof of expenditure (credit card bill, bank statement, etc.) for everything other than the £5 PIEs allowance for overnight stays away from home (£10 if overseas) is going to face a bill when audited for tax due, plus interest and penalties. There is no such thing as an unreceipted de minimis, per diem or anything of the sort and anyone who thinks the taxpayer is going to pay you just for leaving the house in the morning is at best incredibly naiive.