Reply to: expenses

[Lucifer Box]

Haven't the IR and C&E merged now?

Yes, but they retain their separate investigatory powers (for the moment). IR35 Avoider is correct, customs inspectors involved in excise investigations do not require a search warrant in advance and there was (and is) concern that these powers should not de facto be applied to non-excise matters.

[PerlOfWisdom]

Customs and Excise (unlike IR and even the police) can walk into your home whenever they want to?

Haven't the IR and C&E merged now?

[IR35 Avoider]

Where potential tax fraud (especially VAT) is suspected they can legally look up your arsehole if they want to.

On the subject of VAT, am I right in recalling that Customs and Excise (unlike IR and even the police) can walk into your home whenever they want to? (I mean they don't need a warrant or permission from anyone.) Even if I'm wrong, I believe the powers of C&E are frightening which is why many people were concerned about the merger with IR, lest they get the same powers.

An equally dodgy distant memory tells me that the French border police (Customs equivalent?) used to be able to simply "disappear" you and hold you for up six months. (i.e Arrest you without telling anyone, including your family or a judge, and without allowing you access to a lawyer.)

[boredsenseless]

Yeah but its the big stick that they do the looking with that you should be worried by

[Bagpuss]

Where potential tax fraud (especially VAT) is suspected they can legally look up your arsehole if they want to.

That's Ok then, nothing to see up there!

[Lucifer Box]

I know they can look at your company bank statements, but who buys the petrol on the company? I mean personal bank details?

Where potential tax fraud (especially VAT) is suspected they can legally look up your arsehole if they want to.

[Bagpuss]

Is that a serious question?

I know they can look at your company bank statements, but who buys the petrol on the company? I mean personal bank details?

[Lucifer Box]

Can they legally look at your bank statements?

Is that a serious question?

[Bagpuss]

Check the HMRC definition of expenses. They are to reimburse you for the costs you have incurred. So you can't claim miles you haven't driven.

Lets assume one day they decide to investigate you...

You say you are at home (as you drove home that night) but they happen to check credit card receipts and see that you where in actual fact 100 miles away - oh dear go straight to your cheque do not pass go pay them loads of cash.

Can they legally look at your bank statements?

[Robot]

Input VAT on mileage

The mileage allowance does include a VAT element that should be reclaimed by the business

This may end at the end of the year - The UK lost their case before the European Courts RE claiming input VAT on mileage.

Awaiting an announcement from HMRC soon on this subject.

[Bradley]

As others have said, you cannot claim for expenses you have not personally incurred. Sorry, you can - but they will constitute taxable income that will be subject to employer's NIC, employee's NIC and income tax in much the same way as additional salary.

If your contract satisfies the temporary workplace rules, you can legitimately claim for the (actual!) mileage, hotel costs, meals and an overnight per diem allowance (£5 when within the UK).

The £5 per diem allowance can only be claimed when there is an average of £5 or less spent over the term of the overnight visit(s). The £5 cannot be claimed if no expenses were incurred.

A tip: remember when invoicing your client that you must charge VAT on the whole invoice, even for the likes of mileage allowances where there wasn't any VAT incurred by you in the first place. Many contractors overlook this point, but a VAT Inspector won't!

The mileage allowance does include a VAT element that should be reclaimed by the business

[Taxman]

Doing contract via MyCo and paying myself a salary upto the personal tax limit so no tax to pay and then putting in a claim to MyCo for travelling everyday @ 40p per mile (but actually stopping in a hotel during the week).

MyCo invoice the client for the correct hotel / mileage costs with the correct VAT rate etc.

Am I okay to do this as no tax to pay at all or am I storing up a lot of trouble for the future ?

As others have said, you cannot claim for expenses you have not personally incurred. Sorry, you can - but they will constitute taxable income that will be subject to employer's NIC, employee's NIC and income tax in much the same way as additional salary.

If your contract satisfies the temporary workplace rules, you can legitimately claim for the (actual!) mileage, hotel costs, meals and an overnight per diem allowance (£5 when within the UK).

A tip: remember when invoicing your client that you must charge VAT on the whole invoice, even for the likes of mileage allowances where there wasn't any VAT incurred by you in the first place. Many contractors overlook this point, but a VAT Inspector won't!

[rootsnall]

You can fiddle a few extra quid by careful mileage doctoring and a few quid here and there by other small scale efforts but as the 'For Goodness Sake' post infers it probably isn't worth it. The attitude conveyed by accountants and the taxman when I've dealt with them is if you don't take the piss you'll more than likely get away with it. The 'EBT' route seems the only way to make significant tax savings, it is 'taking the piss' but if you don't get investigated or if the scheme holds up legally when scrutinised then you've made your savings.

[Bradley]

Re:Less is more?

I beieve there is now a concessionary oh so generous £10 a week you can claim on home as office with no Qs asked. Else you can claim heat and light only and need to justify. If you want to get more you need to have a proper rental agreement drawn up, perfectly legal AFAIK.

It's £2 per week

[boredsenseless]

Check the HMRC definition of expenses. They are to reimburse you for the costs you have incurred. So you can't claim miles you haven't driven.

Lets assume one day they decide to investigate you...

You say you are at home (as you drove home that night) but they happen to check credit card receipts and see that you where in actual fact 100 miles away - oh dear go straight to your cheque do not pass go pay them loads of cash.

Secondly do you do enough miles on your car to actually 'hide' the number of miles you are claiming - as the first thing they do is ask if you only use one car then ask to see the milometer - guess what if that reads less than your claims you'll be getting the cheque book out again.

And if you have really taken the p155 they could even like you if you like porridge for breakfast - although in reality they'd prefer to fine you an obscene amount.