You Cannot Claim Expenses You Have Not Incurred

[oraclesmith]

Ah yeah. I always add 'in my opinion' to my missives. Sorted now. Thanks.

Anyhow, in terms of umbrella's it also depends on the exact wording of their dispensation and which employees it applies to and what is defined as the 'normal place of work' for these employees. The only one I've seen is the P4 one and it looks like the sort of thing that large employers get that allows them to pay flat rate per-diem allowances to their employees when working away from their normal place of work.

The situation is pretty clear in the normal permie employer-employee PAYE relationship and there are many financial policies which state clearly that the per-diem amount is tax free. So it should also apply to the umbrella-contractor relationship - because the contractor isn't really a true self-employed contractor in this case, they are a temporary member of the umbrella's staff.

In my opinion.

Someone could always write to HM Inspector about the umbrella per-diem dispensations, for example :-

http://www.prosperity4.com/common/pd...sations_lr.pdf

...and how they affect the personal tax record keeping requirements for umbrella employees/members, if they really want to clear it up - and maybe publish the response. Volunteers ?

[Gonzo]

As always, Oraclesmith knows far more about these things than I do.

Listen to him, not me.

I am far more careful when what I say might come back against my PII.

[oraclesmith]

The answer of course is that they don't 'get away' with anything. The per diem rates are supposed to be a fair assessment of the daily expenditure incurred by employees staying away from the office, regardless of the actual expenditure incurred. They are not maximum rates within which actual expenditure is to be contained.

You'll find per-diem subsistence rates littering the financial policies of a lot of large employers. The policies for Sheffield Uni, Roehampton, UCL etc are on the net so you can see how they operate. Per diems are used as an alternative to claiming actual expenditure and providing they are within the maximum per-diem level that HMRC impose on the employer and the per-diem 'event' actually occurred (eg. the overnight stay actually happened) then they are tax free to the employee as they are not regarded as wages. There is usually a sign-off form in place so the employee can certify that the event actually happened, but not the amount of expenditure incurred (otherwise it would defeat the point of the scheme which is to reduce the bean-counting by employee and employee alike).

The 'getting away with it' bit occurs when the person claiming the per-diem actually spends less than the per-diem amount. Well, that's not their problem as it is up to the employer and the tax authorities to set the rate. In the US, for example, the IRS sets public per-diem stay rates for each State. Sometimes the employee will spend a bit more than the per-diem rate and therefore lose out, most of the time they will spend less and feel a bit naughty about 'getting away with it'. Either way, the per-diem rate should be set to fairly generously reimburse for average daily expenditure.

Employers always get the benefit of less admin so they don't mind setting per-diem rates a bit high. If you sign up to an umbrella you're an employee so you simply follow your employers policies.

In my opinion.

[Gonzo]

Correct Myself

Professional musicians generally refer to them as "PDs". That's all they can pronouce.

[Gonzo]

Per Diems

Is how professional musicians refer to the few quid a day they get from their tour manager to spend on what they like.

I very much doubt they get receipts for anything. How do they get away with it?

[oraclesmith]

Yes but 'per diem' rates are fixed nominal rates per day or whatever. They are used instead of actuals. They, by definition, do not represent actual expenditure, just approximate expenditure.

[malvolio]

... It really is that simple.

Totally agree. Snag is, so are a lot of umbrella-using contractors

[Lucifer Box]

I'm afraid it implies nothing of the sort. It means that P4 don't have to see your receipt for claims up to the per diem amount. Nothing more and nothing less. It does not mean you don't have to have a receipt. It does not mean you can claim for something you haven't actually purchased. It does not mean you can claim more (or less) than the cost incurred if you did actually incur a cost.

Looks, it's really simple. You can only claim for expenses you have incurred and you have to be able to prove it with a receipt or other proof of purchase (credit card bill, bank statement, etc.) if challenged. It really is that simple.

[oraclesmith]

If your umbrella says otherwise, they are lying. You need receipts or proof of spend for all expenditure claims. The ONLY exception is the £5 PIEs allowance for overnight stays away from home which is designed to cover things like a cup of a coffee, a newspaper, and a quick call home.


Admin, can you please make this a sticky?

Maybe. We need HMRC clarity on the dispensations they're handing out. The HMRC letter that P4 have published on their site says the allowances are 'per diem' which kind of implies that they're a fixed rate so if, for example, you spend a night away, you must claim the fixed amount and no more or less. Could catch people out if it's not the case.

[MrsGoof]

Unless it's in the back room...

would that be through the back door

I'll get my apron.....

[Spacecadet]

I always thought getting relief from Lap dancing was easy

Not really, most clubs take a rather dim view of it

[MrsGoof]

Or £10 if overseas.

Anyway you can claim absolutely anything you want. Lap dancing, recreational drug abuse etc is not a problem to claim. It's just getting releif on it that's the tricky bit.

I always thought getting relief from Lap dancing was easy

[ASB]

Or £10 if overseas.

Anyway you can claim absolutely anything you want. Lap dancing, recreational drug abuse etc is not a problem to claim. It's just getting releif on it that's the tricky bit.

[Lucifer Box]

If your umbrella says otherwise, they are lying. You need receipts or proof of spend for all expenditure claims. The ONLY exception is the £5 PIEs allowance for overnight stays away from home which is designed to cover things like a cup of a coffee, a newspaper, and a quick call home.


Admin, can you please make this a sticky?