Reply to: Expense queries for Ltd company (no accountant)

[Chart Accountancy]

FreeAgent

The dispensation requirement was abolished with effect from 6 April 2016 which was used to remove the reporting requirement on a P11D of the reimbursment of business expenses. Therefore, for 2016-17, you will only need to complete P11D to report taxable benefits provided by the company to its employees, I.e private healthcare, company car with private use, etc.

[Andrew@Wisteria]

So long as you're not caught by the 24 month rule, all of travel, accommodation and subsistence expenses are claimable. If you're not aware of the 24 month rule, you're going to need to read the guides over there ---> and the other threads on the subject to make sure you understand it but in short, if you spend more than 40% of your time on-site (you do) as soon as you know you're going to be there for more than 24 months you need to stop claiming. If your initial contract was for more than 24 months you cannot claim anything. If it isn't, then as soon as its extended beyond 24 months you need to stop claiming.



Professional subscriptions normally are but I think they need to be on the HMRC approved list to be deductible against your corporation tax bill, business insurances fine. You can't claim for your mobile phone contract if its not in the company name but YourCo can pay for a phone (even for mixed use) and you can reclaim the cost of any business calls if these have an itemised cost (i.e. not included in your normal plan minutes).



It's irrelevant whether expenses are paid directly from the company account or not if they are employee expenses (e.g. travel, subsistence, accommodation, business calls). I believe the 2015/16 tax year was the last tax year you would have needed to fill out a P11D for these kinds of expenses, they are now covered by exemptions, so no P11D needed and you don't need to mention the expense payments or make an expense claim on your tax return.



Yes and yes (although the £5 incidental expenses claim is per night, not per day).

Correct re p11d, automatic exemption applies from 16/17. We applied for exemptions prior to that.

[Andrew@Wisteria]

Hi All,

I've been through a good few posts but I am looking for further clarification on the minefield of expenses. My situation - Ltd Company Director (formed in September 2016) and only employee, registered in Liverpool but have a year contract in Birmingham so travel down Sunday/Monday and leave Friday. I <b>do not</b> have an accountant which I realise may have been a mistake but I've took a massive wage hit due to a downtown in my industry and I decided I wasn't earning enough to justify pay £150-odd per month to an accountant.

- Firstly I claim: rent in Birmingham, travel to/from Birmingham plus the odd coffee/water/snack, commute from rented property to work each day (train), occasional food from the canteen (Between £2-6; bring lunch in otherwise which I dont claim for), professional subs, insurance..I'm sure these are allowable? I've avoided putting say my phone as it's business and personal.

- Do I need to file a P11D? All of my expenses come out of the company account with a few exceptions I've paid for myself and expensed it back into my current account later on.

- Can I claim £4/week home office use (When I do admin company etc)? And can I claim £5 per day for incidentals whilst I am in Birmingham?

Thanks!

I've not read any of the responses but based on the questions you asked, get an accountant before 05/04/17 to save you tax and deal with these sort of questions.

Not sure why you wouldn't put phone in the business.

[LondonManc]

Always been an interesting one.

I have known perm consultants renting their own accommodation and they used to submit expenses of this nature, from supermarkets, all the time.

There didn't seem any problem with claiming it in this scenario.

Different if that's getting through-billed to the client as an expense via the consultancy rather than a legit HMRC-side expense.

[MrMarkyMark]

Always been an interesting one.

I have known perm consultants renting their own accommodation and they used to submit expenses of this nature, from supermarkets, all the time.

There didn't seem any problem with claiming it in this scenario.

[vwdan]

Genuine question. Have you asked your accountant about this and what did they say?

I haven't - it wasn't until this thread it even cropped up that it may be different. I'm worried that they'll go the easy route of saying "You can't", but even if they don't, I'm still stuck with a lot of conflicting advice. I know it's easy to say "oh, it's only a couple of quid" but it adds up for sure - no VAT, taxed CT and then taxed personally vs being expensed.

The main thing for me is that I can't see anything in any of the rules to indicate that there is a legal difference between eating out vs making your own food. The examples given by HMRC appear to be very deliberate in making a point against making food at HOME, i.e., prior to your allowable journey commencing - rather than it being a point about the type of food itself.

Lots of people comment on it, but none of it seems to be rooted in fact.

And you're right, I am hellbent on getting to the bottom of it and it kind of frustrates me that, for a forum normally so fussy about the rules everyone just seems to huff on this one and call it quits!

[northernladuk]

Genuine question. Have you asked your accountant about this and what did they say?

I really don't think you are going to get a solid answer to this so you are going to have to make a decision based on the risk to you.

For me it comes down to two factors to make a single conclusion.

HMRC rules say “everyone must eat in order to live and such costs are normal costs of living incurred by all and not incurred for the purpose of trading”

What this means is that because you derive some personal benefit from eating (you eat to stay alive) and you’re not eating just to do your job, the cost of food and drink is not wholly and exclusively for the purpose of your business and can’t be included as an allowable business cost.

There is the statement above. HMRC's eat to live statement is widely circulated so that's a base point. The second would be the fact you are aware from home so should be compensated for any extra costs incurred. The problem I have is buying ingredients doesn't not show any extra cost or inconvenience than it does at home so I can't justify the claim.

If you are talking eating out because you work long hours or you can't cook because it's too inconvenient (like a shared house or AirBnB) then I'd be happy to claim that. By being away from home it costs me more to live so I'd claim it.

Bearing in mind non of our accountants have posted I'd be interested to see what yours says.

To be fair though, if you are so hell bent on an answer then I'd say claim it if you want to and argue it later and then just carry on.

[vwdan]

From ContractorWeekly, by Graeme Bennett of Forbes Young Accountancy:

"With regards to accommodation and subsistence, it comes down to what are necessary business purchases – it depends on your accommodation whilst you’re contracting away from home with regards to what you can claim. For example if you’re renting an apartment with a kitchen facility then you’re able to make breakfast, lunch and dinner as you usually would at home and therefore would not be claimable through your limited company. If you were staying in a hotel then the likelihood would be that you’d need to eat out and therefore breakfast, lunch and dinner would be claimable through your limited company."

AccountingWeb cites the case of FTT in Tim Healy with the following statement:

"In this case Mr Healy has rented a flat. I do not find that expenditure on subsistence in a flat can be treated as incidental to the rental of that flat in the same way as expenditure on food in a hotel where one is resident."

For the tax savings involved, it's not worth the risk imho.

We've already concluded that the first article is crap.

The second is self employed so a different set of rules completely. Totally understand the risk adverse point of view, but I'm really keen to get to the bottom of this.

Edit: Again, important to remember the law is completely different for self employed people, but here's some interesting commentary:

http://www.rossmartin.co.uk/sme-tax-...modation-costs

The issue wasn't how he was eating or what - the query was whether any of his expenses were deductable. The key problem being this:

Mr Healy's admission that when choosing his accommodation, the consideration of chosing accommodation with the intention of having his guests to stay was the single factor that sealed his fate.

Again, we can't draw conclusions for Ltd Co contractors based on this, but the whole case does raise and answer some interesting points. In particular, it seems to make fairly clear that (for the self employed) if a hotel is allowable then a flat likely is too, and if food in a hotel was allowable then any food in a flat is too.

Found the final thing in full for anyone very bored:

https://www.pumptax.com/wp-content/u...ley28.5.15.pdf

[LondonManc]

So, I'm looking at page 37 on that 490 leaflet and I'm still not seeing anything to back up the idea that cooking is treated differently. It's very clear that you can't make a sandwich at HOME and then claim it, even though you may be able to claim a sandwich from a petrol station on that day but I'm still seeing nothing special about rented accommodation having a kitchen, or "meals" vs "cooking"

From ContractorWeekly, by Graeme Bennett of Forbes Young Accountancy:

"With regards to accommodation and subsistence, it comes down to what are necessary business purchases – it depends on your accommodation whilst you’re contracting away from home with regards to what you can claim. For example if you’re renting an apartment with a kitchen facility then you’re able to make breakfast, lunch and dinner as you usually would at home and therefore would not be claimable through your limited company. If you were staying in a hotel then the likelihood would be that you’d need to eat out and therefore breakfast, lunch and dinner would be claimable through your limited company."

AccountingWeb cites the case of FTT in Tim Healy with the following statement:

"In this case Mr Healy has rented a flat. I do not find that expenditure on subsistence in a flat can be treated as incidental to the rental of that flat in the same way as expenditure on food in a hotel where one is resident."

For the tax savings involved, it's not worth the risk imho.

[craigy1874]

I wouldn't place too much emphasis on booklet 481/490 - remember this is HMRC's interpretation of the law, rather than the law itself.

If you meet the criteria to claim expenses under the 24 month rule, you can claim travel, subsistence and accommodation expenditure.

I think it is, therefore, reasonable to claim ingredients for breakfasts, lunches and evening meals if you are living in rented accommodation. That being said, I ALWAYS tell my clients to get a separate receipt for the subsistence expenditure incurred while working away from home. i.e. booze, fags etc. should be bought separately!

[vwdan]

See post 4 of this thread.

They are good bed time reading material if you have difficultly sleeping.

So, I'm looking at page 37 on that 490 leaflet and I'm still not seeing anything to back up the idea that cooking is treated differently. It's very clear that you can't make a sandwich at HOME and then claim it, even though you may be able to claim a sandwich from a petrol station on that day but I'm still seeing nothing special about rented accommodation having a kitchen, or "meals" vs "cooking"

On the contrary, it seems pretty clear that if you're buying food & drink during (and to consume within) a qualifying journey then it's almost certainly allowed.

Interestingly enough, I've had heat from this forum regarding lunches whereas that document uses lunch as a specific allowed example even if you're not staying away.

[SueEllen]

I'll try and find them (unless you have the link?) but we all know HMRC have a habit of publishing what they think the law should be, as opposed to what it actually is.

See post 4 of this thread.

They are good bed time reading material if you have difficultly sleeping.

[vwdan]

I posted links to HMRC booklets about employee expenses which also includes director expenses. Somewhere in those booklets it says the same as what NLUK just quoted.

In short if you can make a meal in your rented or hotel accommodation you cannot claim other food expenses except a meal if you are traveling.

I'll try and find them (unless you have the link?) but we all know HMRC have a habit of publishing what they think the law should be, as opposed to what it actually is.

[northernladuk]

Terrible article. If you're at a temporary workplace then any meals purchased whilst travelling or while on site are claimable.

He's not talking about meals. He's talking about ingredients.

[pr1]

Terrible article. If you're at a temporary workplace then any meals purchased whilst travelling or while on site are claimable.

are you counting "travelling" as anything between your permanent workplace (home) and the temporary workplace (client site)

i.e. you could live somewhere in the middle (rented flat), completely tax free for all meals and travel, for up to 2 years?