HMRC Investigation - update.

[bangface]

No.

Edit: And how could you? Who could get buy on minimum wage every month?

Some manage ok it would seem, but then thats down to personal circumstances and your accountant to advise you accordingly.

Paying a monthly div albeit not as contentious as some on this board who openly admit to paying themselves weekly divs and the combination of the minimum wage might just have been the right combo that brought you under the scrutiny of HMRC...

[bangface]

Thats the whole point of the IR argument - if you cant get by on the wage you pay yourself then the LTD is just a means of avoiding tax!!

What I am doing at the moment is drawing divvies to build up a "nest egg". Once I have that, I will be able to reduce my wage and live off the "nest egg each month" and then draw divvies on a quaterly or bi-annual basis to replenish the "nest egg" plus buy any things I want (techy gadgets, holidays, cars, etc).

Well thats the theory anyway.......!!

Excatly, and its funny how a good accountant would not have advised you of this as its common sense/practice really.

I hope it all works out well for you in the end. Could be a lesson learned though...

[ASB]

Feck me - so they're seriously saying that if you're a limited company, and you spend more than 40% of your week at a clients base, then it's your permanent place of work and therefore cant claim any expenses?!!!! even if the clients base is on the other side of the country?!

Dunno the details or what they are using to deny the claim. However I would assume that they are claiming the contract was a permanent workplace - or that you don't have a permanent workplace - or that the temporary workplace was in fact a second permanent workplace. Ultimately I guess this is what you will need to counter.

Some limited info for background

http://www.hmrc.gov.uk/employers/ebi...-travel-05.htm
http://www.hmrc.gov.uk/employers/ebi...-travel-08.htm

Part of the counter argument may be that your permaent workplace is in fact your home. You may be able to establish this on the basis os the fact that substantive duties [not the same thing as substantial, although HMRC sometimes like to claim it is] are performed there. This may be achievable, it's where you do the admin, arrange the contracts etc.

I know dmini posted it up:-

If he or she does spend more than 40% of his time at a single site, but the engagement is both expected to, and actually does, last for no more than 2 years, a deduction for travel costs will also be available.

This does not appear to be the view they are taking with you. A specific example HMRC use:-

http://www.hmrc.gov.uk/manuals/esmmanual/ESM3225.htm

And you might like to look specifically at what the paymaster general said, and is quoted here: http://www.hmrc.gov.uk/manuals/esmmanual/ESM3224.htm

What they seem to be doing in your case is disregarding the fact that you are actually employed by SALtd. I beleive they have no basis to do this. Unfortunately it is likely that you will need technical argument prepared to rebut this. That is going to cost.

[Edit: Also I recall there may have been a case some years ago that might be relevant. Hindmarch or similar I think it was, but I can't find any details.

[gingerjedi]

Thats the whole point of the IR argument - if you cant get by on the wage you pay yourself then the LTD is just a means of avoiding tax!!

What I am doing at the moment is drawing divvies to build up a "nest egg". Once I have that, I will be able to reduce my wage and live off the "nest egg each month" and then draw divvies on a quaterly or bi-annual basis to replenish the "nest egg" plus buy any things I want (techy gadgets, holidays, cars, etc).

Well thats the theory anyway.......!!

I know some will advise against monthly divvies but don't think that just because you can afford to take them quarterly or bi-annually they are any more or less lawful, I can't see how it makes any difference how often money is paid into a personal account, is there any evidence to suggest you are more likely to be targeted paying monthly div's? Apart from SA of course

[Numptycorner]

It's easy to reach if you're claiming accomodation, mileage, Personal Incidental Expenses. My annual expenses are usually around that or slightly higher.

Had an investigation into expenses about 5 years ago. Fortunately they agreed they were legit and didn't choose to investigate anything else or take it any further. May have been before IR35 though so not looking forward to any future investigations if they're being so unreasonable.

the tax bill is 11k not the expenses. One wonders what level of expenses would result in an 11k saving in tax?

[zamzummim]

What's the big deal - 11 k with your £550 a day should be like a month's wages - stall them and say you can pay over 3-4 months this way it wont hurt you too much.

[timh]

the tax bill is 11k not the expenses. One wonders what level of expenses would result in an 11k saving in tax?

About fifty grand? Seems excessive!

If I'm working in London all year my expenses come to about 12-15K, but that's a far cry from 50.

Scary subject, anyway - good luck Sally!

[Numptycorner]

About fifty grand? Seems excessive!

If I'm working in London all year my expenses come to about 12-15K, but that's a far cry from 50.

Scary subject, anyway - good luck Sally!

Perhaps sally might like to tell us if they are just disputing expenses or trying to claim she is inside IR35?

[ASB]

the tax bill is 11k not the expenses. One wonders what level of expenses would result in an 11k saving in tax?

Could be "as little as" 28k if she is a 40% tax payer. That might sound a lot, but if it was for a complete year it's not really a huge amount. It's not exactly hard to spend 125 quid a night on a hotel room and something to eat.

I'm sure she could have stayed in some 15 quid flea ridden b+b, but she doesn't have to.

[cojak]

Thats the whole point of the IR argument - if you cant get by on the wage you pay yourself then the LTD is just a means of avoiding tax!!

What I am doing at the moment is drawing divvies to build up a "nest egg". Once I have that, I will be able to reduce my wage and live off the "nest egg each month" and then draw divvies on a quaterly or bi-annual basis to replenish the "nest egg" plus buy any things I want (techy gadgets, holidays, cars, etc).

Well thats the theory anyway.......!!

It's a theory that works.

I draw divis quarterly...

And if you pay yourself £10k - £12K pa you can sleep soundly.

Others may disagree with this but it works for me...