Reply to: Daily Substinence

[Gobsheen]

Confused......Noob Alert!

Hi,
My first post, and I'll probably drag this round in another circle!

Here's my basic's......
New to contracting - started mid-June. Ltd co. Sole Director.
In a 6 month contract, split across 2 sites in one city. It won't extend to break the 24 month rule.
I'm away from the house for over 10 hours on a normal day (6:45am-6-ish pm). Travel 40 miles return each day.
My accountant says I can't claim subsistence but every other contractor working here claims the £5 per day, unreceipted.

I've read the post and links, particularly.....EIM05231 - Employment income: scale rate expenses: subsistence expenses: table of benchmark scale rates

That looks to me like I qualify for the 10 hour subsistence expense of £10/day. To clarify, I do buy breakfast and lunch, plus some caffeine to keep me alive!

Qualifying conditions - Benchmark scale rates must only be used where all the qualifying conditions are met. The qualifying conditions are:

-the travel must be in the performance of an employee’s duties or to a temporary place of work
-the employee should be absent from his normal place of work or home for a continuous period in excess of five hours or ten hours
-the employee should have incurred a cost on a meal (food and drink) after starting the journey

[LisaContractorUmbrella]

To give a history of scale rate payments - they were originally introduced by HMR&C themselves to save time and effort. Normally they would have to complete P11D's, file receipts, log details of expenditure etc and doing all this with loads of receipts from Starbucks for a couple of quid got a bit wearing so they decided that anyone who was packed off on detached duty (or temporary location) could claim £4.95 per day to cover subsistence. However, this could only be claimed under those circumstance and if a cost had actually been incurred - claiming it in any other circumstances resulted in disciplinary action. This is HMR&C's intention for scale rate payments so should be an indicator.

[rawly]

No. A cost must also have been actually incurred. It's not an allowance. Did you read the links?

We both agree on that. What I don't think you are getting is the method of verifying the expenditure. You only need receipts if you don't have an independent verification method for checking the expenditure was legimate.

"You must have an independent system in place for checking and authorising expenses claims. At a minimum, this means having someone other than the employee claiming the expenses check that the:
•amount claimed isn't excessive
•claim doesn't include disallowable items
"

Specifically, many One Director businesses will probably fall foul of:

"If it is not possible for you to operate an independent system for checking and authorising expenses claims - for example, because you are the sole director of your company and you have no other employees - you will only be able to obtain a dispensation if you:
•ensure all expenses claims are supported by receipts for the expenditure
•demonstrate that the claim relates to expenditure that can be covered by a dispensation - your receipts may be sufficient for this purpose, but if not you must retain additional information
"

HM Revenue & Customs: Dispensations

[Contreras]

Well- you only have to keep a record your made the business journey (>5 hours away) and you can claim the £5. You don't necessarily need receipts for it, just a clear record.

No. A cost must also have been actually incurred. It's not an allowance. Did you read the links?

[rawly]

It is not a round sum "allowance" - a genuine cost must have been incurred, and receipts where available should be kept as evidence.

Well- you only have to keep a record your made the business journey (>5 hours away) and you can claim the £5. You don't necessarily need receipts for it, just a clear record. (and the granted dispensation)

EDIT: Although HMRC do state "Where possible supported by receipts" is open to interpretation!

http://www.hmrc.gov.uk/forms/p11dx.pdf

[rawly]

It is questionable whether "7 minutes walk" qualifies as a business journey.

>5 Hours away from "Home" is allowable as a £5 meal (assuming dispensation granted), as there is no rule that states there is a minimum mileage you have to walk/drive away from that "Home".

(I'd have thought!)

[Contreras]

The last I heard the flat rate subsistence is directly related to Business Travel away from Home - if I am allowed to claim the mileage when commuting to a Temp Workplace, then surely the £5 non-receipted flat rate goes hand in hand with that! (and hence staying overnight or not is neither here or there!)

My accountant has never pulled me up on this (and they are a well known one on here!!! But I am not saying who!)

However, I will go and check my facts again, as I'd hate to have been doing something incorrectly for the past couple of years!

This thread now seems to be going round in circles.

There is no such thing as a "non-receipted flat rate". (Edit: AFAIK!)

You claim the benchmark scale rates if your company has dispensation from HMRC. It is not a round sum "allowance" - a genuine cost must have been incurred, and receipts where available should be kept as evidence. Follow the link and note especially what it says about Qualifying conditions.

If your company does not have dispensation then you claim subsistence payments on actual costs.

Subsistence payments are only tax free if associated with a business journey away from your normal place of work (i.e. home).

It is questionable whether "7 minutes walk" qualifies as a business journey.

[rawly]

I think this is where the £5 subsistence come from:

EIM05231 - Employment income: scale rate expenses: subsistence expenses: table of benchmark scale rates

One meal (5 hour) rate £5

One meal (5 hour) rate - The rate may be paid where the employee has been undertaking qualifying travel for a period of at least 5 hours and has incurred the cost of a meal.

the employee should be absent from his normal place of work or home for a continuous period in excess of five hours or ten hours

[rawly]

I think 2a is incorrect - the non-receipted £5 (personal incidental expenditure) is only for overnight stays only. Howerver, you can claim receipted lunch.

The last I heard the flat rate subsistence is directly related to Business Travel away from Home - if I am allowed to claim the mileage when commuting to a Temp Workplace, then surely the £5 non-receipted flat rate goes hand in hand with that! (and hence staying overnight or not is neither here or there!)

My accountant has never pulled me up on this (and they are a well known one on here!!! But I am not saying who!)

However, I will go and check my facts again, as I'd hate to have been doing something incorrectly for the past couple of years!

[AJ1982]

All,

Thanks very much for the replies, looks like the general advice is "proceed at your own risk" as well as the large can of worms this seems to have opened up.

Appreciate everyones help, looks like I wont be claiming these as expenses, thanks again everyone

AJ

[Hex]

Page 13 here http://www.hmrc.gov.uk/guidance/480.pdf refers to the employer being able to pay for late night travel if it's not regular, up to 60 times a year.

I've seen it somewhere else when talking about breakfast. I'll keep looking.....

Interesting snip from that doc on page 77 (my bold):

The expenses rule which applies to travel costs also covers related subsistence costs. This type of
expenditure qualifies for a deduction where it is part of the cost of travel necessarily incurred in
the performance of the duties, or for necessary attendance at a temporary workplace. So, in
general, payments by an employer for an employee’s accommodation and subsistence when
staying away from home overnight on business are not taxed.
Allowable expenses can include the cost of a meal, the cost of a reasonable level of refreshments
(both alcoholic and non-alcoholic) with the meal and refreshments such as tea, coffee or soft
drinks taken between meals.

[Clare@InTouch]

Haven't read that one I must admit but I'd be surprised - in a 47 week working year that would equate to more than once a week - knowing HMR&C I can't see that would meet the definition of unusual even with their woolly thinking

Page 13 here http://www.hmrc.gov.uk/guidance/480.pdf refers to the employer being able to pay for late night travel if it's not regular, up to 60 times a year.

I've seen it somewhere else when talking about breakfast. I'll keep looking.....

[northernladuk]

That's probably because you should be searching for subsistence....

LOL! Brilliant

[LisaContractorUmbrella]

I read somewhere that 'unusual' would be no more than 60 times a year. That's not to say that you have free reign to just claim 60 times, but that if you go over that amount then you can expect HMRC to disallow if they investigated.

Haven't read that one I must admit but I'd be surprised - in a 47 week working year that would equate to more than once a week - knowing HMR&C I can't see that would meet the definition of unusual even with their woolly thinking

[Sausage Surprise]

Thanks Clare, so staff canteen is claimable, I would imagine this is lost if I decide to go ltd as staff canteen is a trigger for IR35?

What about off site lunch be it pub or takeaway?

I only ask as the only substinence information I can find relates to working "away from home", where of course I am working "away" the case is that "home" is footsteps away and I can see HMRC beating me when they find out I am potentially taking the michael.

Or am I worrying over nothing?

Thanks

AJ

That's probably because you should be searching for subsistence....