Worldwide subsistence rates

[peterpanman]

WRONG WRONG WRONG WRONG!

I was using the same information, provided to me by my accountant, whilst in Norway for 3 years. Then had a tax investigation and the guy said. . . . common misconception this, then provided me with the following information:

For one man service companies the relevant guidance would be found in EIM30059 (EIM30059 - Dispensations: checking and authorisation of expenses payments) which states that for one man service companies as no one else is employed by the company who can check expenses reimbursed they must ensure:
- Expense is independently vouched (ie by accountant. "Vouched" requires the majority of expenditure to be receipted but does seem to have an allowance for small expenditure such as taxi fares)
- Expense is allowable as a deduction (wholly, exclusively and necessarily incurred - again would need proof of occurrence)
- Officer satisfied no additional tax is at risk.

Even when not a one-man service company regular checks are required for employers using these schemes - although employees don't need to keep receipts for HMRC they generally do need to keep them until checks by employer are carried out.

[mudskipper]

Thanks. Just did 3 nights away - paid for hotel and one meal from company account, but will go for it on the rest.

Too late for my 3 weeks in Oz last year unfortunately!

[Wanderer]

Eh? Don't get this.

Nope, you are getting it just fine. A scale rate dispensation means your company can pay you the amount in the dispensation without any BIK. The rule is that you must incur an expense but crucially it doesn't matter how small the expense was - your company can still pay you the full amount in the dispensation.

This also applies to companies like umbrellas who have a dispensation for (say) £10 for lunch. You can claim the full £10 even if you spent less than that but you can't claim anything if you spent nothing at all. The kicker is that they only have to audit a section of their workforce so this can be open to abuse.

The situation with an umbrella company or where the employee is the director/main shareholder situation makes dispensations open to abuse because unlike a regular "employer", these entities can pay out as much as they like in expenses and in fact the more they pay out as "expenses", the less tax the worker pays.

Think I've missed a trick on this one.

If you do a google then you will then you will find that there was a concerted effort to deny that a dispensation meant that a worker could be paid the whole amount, regardless of expenditure but that is in fact the way it works. It doesn't help that HMRC isn't crystal clear on this point either (as usual).

[mudskipper]

Eh? Don't get this.

If I spend 3 nights in Afghanistan (no thanks!), and hotel costs $50 a night (to be reimbursed by client) does this mean I can to pay out of my personal account (same with meals) and claim $118.50 * 3 from myCo regardless of actual cost? And the £10 personal incidental expenditure on top?

Think I've missed a trick on this one.

[Boo]

So basically you can go to Australia for example, pay 20 dollars for a room for the night but claim hundreds per day that haven't actually been incurred?

What's the point of claiming actual expenses when abroad when you can just milk it for hundreds that don't actually need to be incurred?

Am i missing something?

I don't know why it's different but it is. As you say, if you are posted abroad then HMRC will accept any amount YourCo pays in recompense up to the limits given in the Scale Rates tables for the relevant country without tax becoming due on it. You need to have receipts to prove that you incurred allowable expenses, but the receipts don't have to be for the sums claimed back under Scale Rates. In the UK you can only claim what the receipts show. Strange but true.

Boo

[SueEllen]

So basically you can go to Australia for example, pay 20 dollars for a room for the night but claim hundreds per day that haven't actually been incurred?

What's the point of claiming actual expenses when abroad when you can just milk it for hundreds that don't actually need to be incurred?

Am i missing something?

The rates are the Civil Service rates.

You can claim up to the amounts stated.

You could say it's milking it but it's to cover the extra costs you have in obtaining meals abroad.

If you stay in self-catering i.e. can cook meals then you can only can only claim half the amount except on the days of travel. On those days you can claim the full cost with receipts.

If you stay with people who cook you meals then you can't claim the meal allowance.

Also use a bit of common sense if your client is paying you £50 and you are clearly invoicing it then only claim the difference in the amounts.

Though I don't know anyone who has been audited but it's better to be safe than sorry.

[chrisl]

confused

So basically you can go to Australia for example, pay 20 dollars for a room for the night but claim hundreds per day that haven't actually been incurred?

What's the point of claiming actual expenses when abroad when you can just milk it for hundreds that don't actually need to be incurred?

Am i missing something?

[LisaContractorUmbrella]

Anyone have any further clarification of worldwide subsistence. Does anyone claim it here when abroad?

Not sure how it could be further clarified - those are the rates as determined by HMR&C

[chrisl]

Anyone have any further clarification of worldwide subsistence. Does anyone claim it here when abroad?

[geoffreywhereveryoumaybe]

Try Here

http://www.hmrc.gov.uk/employers/wwsr-bench.pdf

[chrisl]

I understand the daily subsistence allowance of £5 in the UK or £10 abroad, however where does worldwide subsistence rates come into it?

The end client pays up to £50 per day as an extra subsistence payment regardless of whether an expense has or has not actually been incurred that day.
If no expense was actually incurred then would this amount be taxable or could worldwide subsistence rates be claimed against this so its not a taxable amount?

Any clarification would be helpful.