Reply to: Clarification on subsistence

[ASB]

What the dispensation says is that Prosperity 4 don't need to see the receipts before it pays out the per diem amounts.

It does not say that receipts are not required to be kept by the employee (which they do) but it does say that these are the maximum amounts it can pay without having to report it on the P11D.

Quite. To be fair the wording on the dispensation doesn't make that clear. But they are documents between IR and somebody who would understand this - i.e. payroll.

Passing those documents on to end users who may not understand the distinction is bound to lead to confusion.

[Captain Jack]

Indeed you did, sexy. But it still seemed to be under debate on this page so worth underlining I thought.

[Captain Jack]

Just to underline what Bradley said so succintly as we seem to be going through this virtually every week. You can only claim expenses you have incurred. You have to provide receipts or other proof of expenditure if challenged by HMRC. If you can't you will be presented with a bill for the tax due plus interest and possible penalties.

[Biker Boy]

Thanks for that Bradley. Like I said before, I'm a bit green on this.

[Bradley]

Receipts

What the dispensation says is that Prosperity 4 don't need to see the receipts before it pays out the per diem amounts.

It does not say that receipts are not required to be kept by the employee (which they do) but it does say that these are the maximum amounts it can pay without having to report it on the P11D.

[Biker Boy]

I'm guessing, but trying to use common sense. In the Hotel scenario, at the very least you will need to be able to name the establishment, and if they charge a max of say £69.99 per night for any room, then claiming any more might be foolish.

In the case of friends and family, I'd take that as £25, but make sure they get at least a bottle a week for putting up with you.

Just my humble thoughts.

[expat]

Cue the argument about whether you have to spend it.

Actually I was thinking especially of the £25 for "staying with friend or relative". That was going to be my next question.

[ASB]

Cue the argument about whether you have to spend it.

Does it mean:-

a) If in the smoke you can claim 95 quid if you stay in a hotel and that is the end of the matter.

b) If in the smoke you can claim upto 95 quid without a receipt if you stay in a hotel, but there is always the risk that the IR might come knocking in a subsequent investigation and then miight ask some difficult questions.

I have discounted spending over 95 quid since you will always need a receipt for that.

[Biker Boy]

Do the per diem rates (without need of receipt) apply also to those with their own Ltd Co?

Dunno, I'm just as green on this subject.

[expat]

Here is an Umbrella one sent to me;
http://www.prosperity4.com/common/pd...sations_lr.pdf

Do the per diem rates (without need of receipt) apply also to those with their own Ltd Co?

[Biker Boy]

Here is an Umbrella one sent to me;
http://www.prosperity4.com/common/pd...sations_lr.pdf

[Bradley]

PIEs

Despite the acronym PIEs are not primarily for food or drink. Food and drink are really subsistence and the PIE is something else completely. The PIE's for things like a paper first thing in the morning, a can of coke or snack (not a meal), a call home, a video rental - basically any expenses you incur whilst necessarily staying overnight to be closer to the client site.

[ASB]

Xog,

Yes, no problems. It amounts to a sandwich and a coffee or similar really. I'd claimed a small incidental allowance for the past 20 odd years. Yes it's been through an investigation.

However to pre-empt malvolio :-) , strictly you do need to be able to prove all expenditure (that doesn't mean receipts in actual fact).

An inspector may allow a small daily allowance, or he may not. Generally you will at the least need to convince them it's reasonable. I don't think there is an ESC for it although there might be.

In practical terms it is impossible to get receipts for all small purchases, and an inspector knows this.

But.....

Some inspectors have been known to take an extremely firm line with this sort of thing. There has been at least one case where employees have been charged BIK on sandwiches provided for a lunctime meeting (although he may have relented in the end). Didn't apply to the externals visiting though.

[xoggoth]

Don't quite see it is correct according to the IR's booklet but several contractors I have spoken to have told me that their acountants advise them to claim the maximum £5 PIE allowance each day. Maybe such a small amount will not be queried. Anyone else been so advised by accountant?

PS Zeithghost. PIEs are for unreceipted claims AFAIK. You just need to keep a log to justify. Would think a challenge on PIEs unlikely as they are so small.

[expat]

As a minor aside (Malvolio having as usual covered it with a competent synthesis), is it not the case that umbrella "dispensations" from the IR/HMRC are dispensations on the amount and type of documentation normally required, not on the allowances themselves?

In plain words, in or out of a brolly you get the same allowances. In the brolly you just need to show a bit less paper?