Reply to: Legal Expenses : Claiming Back

[MPwannadecentincome]

Okies the full story for the review.

I was working for secondary agency via another primary agency and getting paid by an umbrella.

Secondary agency were cut loose by the Client.

One the following day, the Client decided to hire me direct.

The primary agency complained, saying that I couldn't work for the Client.

Client said "flip off, the Primary agency are nothing to do with us, and we have no relationship with them. We DID with the secondary agency, but we have fired them. (Seconday Agency were an outsourced department of the Client)"

Primary agency tried to invoke non-solicitation clause in their contract, but my solicitor noted that they forgot to include it in my last contract. Plsu other errors they made as well.

Primary agency then tried to wag the tail of the dog of the Umbrella, and get their non-solicitation clause to bear on me.

However, the umbrella cocked up big time (One of the big 3), because they made a number of major errors in how they handled the introduction of their own non-solicitation cause (and by the looks of it, not just to me, but to many other contractors as well) . My lawyer ripped them to pieces.

The review was of the old contracts, which may have stopped me working for the End Client.

Hence, it was a cost incurred, that enabled me to carry out my business legally.

HTH

blimey!

[Board Game Geek]

Okies the full story for the review.

I was working for secondary agency via another primary agency and getting paid by an umbrella.

Secondary agency were cut loose by the Client.

One the following day, the Client decided to hire me direct.

The primary agency complained, saying that I couldn't work for the Client.

Client said "Feck off, the Primary agency are nothing to do with us, and we have no relationship with them. We DID with the secondary agency, but we have fired them. (Seconday Agency were an outsourced department of the Client)"

Primary agency tried to invoke non-solicitation clause in their contract, but my solicitor noted that they forgot to include it in my last contract. Plsu other errors they made as well.

Primary agency then tried to wag the tail of the dog of the Umbrella, and get their non-solicitation clause to bear on me.

However, the umbrella cocked up big time (One of the big 3), because they made a number of major errors in how they handled the introduction of their own non-solicitation cause (and by the looks of it, not just to me, but to many other contractors as well) . My lawyer ripped them to pieces.

The review was of the old contracts, which may have stopped me working for the End Client.

Hence, it was a cost incurred, that enabled me to carry out my business legally.

HTH

[LisaContractorUmbrella]

The point of this is to understand the difference between a cost to the company and an expense. All sales that you make are recorded on your sales ledger; all purchases on the purchase ledger - as in the case of this legal bill. There are many other aspects to consider but, basically, the difference between the 2 will give your profit on which corporation tax is then applied.

The original question was regarding putting the bill through an umbrella company as an expense. As the contractor is an employee of the umbrella company the bill would be offset against the income tax that the contractor is personally liable for but the contractor would have to prove that the expense was incurred wholly and exclusively because of the work he was doing. In this case IMHO that cannot be proved.

[NotAllThere]

SO if employee of big co paid for the review on his personal credit card because he had left his company one in his other trousers, it would not be offsettable against tax either?

Well, that's what puzzles me. Perhaps there needs to be another classification.

I spend some of my money on behalf of the company, and the company repays me. But it wasn't an expense of mine that was being reimbursed. Perhaps it should be considered as a loan.

[MPwannadecentincome]

But the contract will be between the client/agency and the umbrella company. He'd probably just be a named contractor on it.

True but the brolly won't be negotiating with the agent on employee's behalf? The brolly is just the middle man here whatever is in that contract between agent and brolly is effectively the same as the agent and the employee, i.e. if agent says they will pay 28 days after the end of the month of the timesheet submission then its no skin off the brolly's nose, only the employees.

[blacjac]

SO if employee of big co paid for the review on his personal credit card because he had left his company one in his other trousers, it would not be offsettable against tax either?

[JaredM]

Perhaps just write to HMRC stating you're following the example set by MPs :-)

[Beefy198]

contracts are not just about IR35 - they are about protecting both parties - for instance, I am negotiating with a client direct in the US who have all sorts of bulltulip clauses - damn sight easier to sort that out with professional help though a shock to me that I can't claim it as an expense as I'm still brollied - must get off my a*** and go ltd.

But the contract will be between the client/agency and the umbrella company. He'd probably just be a named contractor on it.

[LisaContractorUmbrella]

I thought brolly fees were always deducted from gross - that's what my brolly does?

Your umbrella company's fees are a legitimate business expense though - them passing on the cost of a lawyer, even disguised as a fee, would not be.

[MPwannadecentincome]

But in order to recoup the cost the brolly would need to deduct the 'fee' from the net rather than the gross which would give no benefit to the contractor. To take it from the gross would mean that it was being processed as an expense which it isn't - for the contractor or a big corporation.

I thought brolly fees were always deducted from gross - that's what my brolly does?

[LisaContractorUmbrella]

In which case the lawyer should be able to invoice the brolly so no expense is involved - the brolly deducts equivalent cost from employee as a 'fee'?

But in order to recoup the cost the brolly would need to deduct the 'fee' from the net rather than the gross which would give no benefit to the contractor. To take it from the gross would mean that it was being processed as an expense which it isn't - for the contractor or a big corporation.

[MPwannadecentincome]

I, along with a couple of other posters, and confused about why you had the contract reviewed? Working under the brolly you wouldn't have to worry about IR35, so what was the review for?

contracts are not just about IR35 - they are about protecting both parties - for instance, I am negotiating with a client direct in the US who have all sorts of bulltulip clauses - damn sight easier to sort that out with professional help though a shock to me that I can't claim it as an expense as I'm still brollied - must get off my a*** and go ltd.

[MPwannadecentincome]

The invoice from the lawyer would be recorded on the company's purchase ledger as a cost of business it wouldn't be processed as an expense. As an employee of an umbrella company is not operating a business this is not an option. Hope that make sense

In which case the lawyer should be able to invoice the brolly so no expense is involved - the brolly deducts equivalent cost from employee as a 'fee'?

[LisaContractorUmbrella]

This is what puzzles me...

Big co uses a member of staff to go to a lawyer to get a potential client contract review done. Lawyer probably invoices Big co for work. Invoice is offset against tax as a legit business expense (am I wrong?).

Brolly employee goes to a lawyer to get a potential client (for the brolly!) contract review done. Employee pays lawyer directly. This is not a legit business expense?

Why o why o why o why are small players continually disadvantaged against bigger ones?

I look forward to someone telling me how I'm wrong - or, is it different for ltd co?

The invoice from the lawyer would be recorded on the company's purchase ledger as a cost of business it wouldn't be processed as an expense. As an employee of an umbrella company is not operating a business this is not an option. Hope that make sense

[MPwannadecentincome]

IMHO this would not be classed as a legitimate business expense.

This is what puzzles me...

Big co uses a member of staff to go to a lawyer to get a potential client contract review done. Lawyer probably invoices Big co for work. Invoice is offset against tax as a legit business expense (am I wrong?).

Brolly employee goes to a lawyer to get a potential client (for the brolly!) contract review done. Employee pays lawyer directly. This is not a legit business expense?

Why o why o why o why are small players continually disadvantaged against bigger ones?

I look forward to someone telling me how I'm wrong - or, is it different for ltd co?