Reply to: Lunch expenses

[vwdan]

[QUOTE=JRCT;2533552][QUOTE=Lance;2533549]

No. I'm on FRS.

I can understand why someone might want the safety and reassurance of keeping receipts. But any process that involves transferring information from bits of paper is absolutely going to be less accurate than an automated process with no manual intervention.

There are two points there, but the second one is definitely correct and any bookkeeper of any make or model will agree with that 100%. You can argue the toss about receipts from an HMRC pov if you like.

Surely the answer is to do both and reconcile the receipts against your listed transactions.

Incidentally, this is precisely what I do - I use a Company Credit Card for all day to day expenses. I then go through them line by line, import receipts and claim for VAT where appropriate. If I've lost a receipt or couldn't get one then I make a judgement call. If the transaction description is a bit vague, I'll just put it from the Directors Loan account to save any hassle

[JRCT]

[QUOTE=Lance;2533549][QUOTE=JRCT;2533544]

..demonstrate having a proper system in place to verify and track that the expenses incurred:



The easiest way of doing this is by keeping a log along with evidence of each transaction (e.g. the receipt).



If that's more accurate you're a really tulipty bookkeeper IMO

do you reclaim VAT on those expenses?

No. I'm on FRS.

I can understand why someone might want the safety and reassurance of keeping receipts. But any process that involves transferring information from bits of paper is absolutely going to be less accurate than an automated process with no manual intervention.

There are two points there, but the second one is definitely correct and any bookkeeper of any make or model will agree with that 100%. You can argue the toss about receipts from an HMRC pov if you like.

[Lance]

[QUOTE=JRCT;2533544][QUOTE=TheCyclingProgrammer;2533538]
..demonstrate having a proper system in place to verify and track that the expenses incurred:



The easiest way of doing this is by keeping a log along with evidence of each transaction (e.g. the receipt).

I disagree. Keeping the receipt is only one way of doing this. All the relevant information that is on a receipt is on my bank statement. Proof of purchase, date, establishment, amount etc. In many cases (small cafes) it actually holds more information than the receipt does.

It's also easier, less time consuming and more accurate.

If that's more accurate you're a really tulipty bookkeeper IMO

do you reclaim VAT on those expenses?

[JRCT]

[QUOTE=TheCyclingProgrammer;2533538]
..demonstrate having a proper system in place to verify and track that the expenses incurred:



The easiest way of doing this is by keeping a log along with evidence of each transaction (e.g. the receipt).

[QUOTE]

I disagree. Keeping the receipt is only one way of doing this. All the relevant information that is on a receipt is on my bank statement. Proof of purchase, date, establishment, amount etc. In many cases (small cafes) it actually holds more information than the receipt does.

It's also easier, less time consuming and more accurate.

[TheCyclingProgrammer]

Question is - is lunch "Wholly and exclusively for business"?

That's not the relevant question. The above question is the "general rule" for business expenses. Lunch taken while on business travel or travelling to a temporary workplace is covered by a more specific rule. HMRC have essentially already taken the view that any subsistence taken whilst travelling for business (or at a temporary workplace) is taken "necessarily" in the course of doing your job.

[Spikeh]

Interesting. I've always claimed lunch expenses when on-site - not at home, obviously. Accountant advised its fine as long as I don't take the mick. I keep all receipts - sometimes my PA logs them in a granular fashion, other times she logs them in bulk. It doesn't matter as long as there's a record.

Question is - is lunch "Wholly and exclusively for business"? Would I be able to perform my services without lunch? Yes... but there has to be a level of humanism here - I don't have the time or resources to prep lunch whilst on a client's site, and the repercussions there is that lunch generally costs me a LOT more when I'm on site.

[TheCyclingProgrammer]

I don't keep any receipts for my lunch/ subsistence. I work away, so claim this every day.

I opened a Tide account and lobbed some money into it. I use this account to pay for every meal, drink, sandwich that I purchase as an expense. I only use it for this. The statements clearly shows where, when and how much. This is far better for HMRC than any faded receipt in a drawer and less hassle than even photo copying or scanning receipt and attaching to my Freeagent accounts.

The only receipts I have to keep are those that I have to pay cash for - eg. taxi.

You probably ought to keep your receipts.

Whilst travel and subsistence expenses reimbursed by YourCo are covered by an exemption (meaning they don't need to be reported on your P11D or your tax return), one of the conditions of being able to make use of these exemptions is that you can demonstrate having a proper system in place to verify and track that the expenses incurred:

Your employees aren’t allowed to check their own expenses, so someone else within your company needs to do this to make sure they’re legitimate.

Tell your employees to keep proof of their expenses, for example receipts or bills, in case you need to check them.

https://www.gov.uk/employer-reportin.../dispensations

The easiest way of doing this is by keeping a log along with evidence of each transaction (e.g. the receipt).

A larger company might get away without having to check receipts for every employee they pay expenses to but as a one-person business without anyone else internally auditing your expense payments keeping the receipts is the easiest way to demonstrate to HMRC that your expense payments are legitimate.

Even before exemptions were introduced, the payments would either a) be covered by a dispensation which needed to be applied for and required a similar means of record keeping and checking as exemptions or b) would be reported on your P11D and tax return requiring you to personally keep the receipts in case you had a tax return enquiry.

Further guidance is outlined here; a systematic failure to retain evidence of expenses incurred under the exemptions regime could lead to HMRC revoking the right to use exemptions:

https://www.gov.uk/hmrc-internal-man...anual/eim30270

[Lance]

I don't keep any receipts for my lunch/ subsistence. I work away, so claim this every day.

I opened a Tide account and lobbed some money into it. I use this account to pay for every meal, drink, sandwich that I purchase as an expense. I only use it for this. The statements clearly shows where, when and how much. This is far better for HMRC than any faded receipt in a drawer and less hassle than even photo copying or scanning receipt and attaching to my Freeagent accounts.

The only receipts I have to keep are those that I have to pay cash for - eg. taxi.

Unless you want to claim VAT.
Or claim a free £5 a day as incidental expenses (receipted).

[JRCT]

Hi there, I had a (hopefully) relatively simple question...

Some context
I work as a contractor on software projects. It's fairly typical work: usually about 3 months on-site before moving onto a new contract.

I've worked in the industry for a number of years, and like all other contractors I've worked with, I keep my lunch receipts + expense them.

I do this by:
• Adding them up at the end of every month
• Creating a bulk expense in FreeAgent for the amount
• Then reimburse myself.

The problem
My (new) accountant is now telling me I need to add lunch expenses individually. Or at least take a photo of each receipt and upload it to FreeAgent.

This amount of work for a £3-4 lunch receipt seems nuts.

Also this is contrary to my previous accountant, who said I could expense them in bulk and reimburse myself (so long as I kept the receipts for 6 years, as normal).

Questions
1. Is this correct? Do I really have to submit each day's lunch expense individually?
2. Are there any software or apps anyone can recommend to take photos and merge them into a single file? Bonus points for FreeAgent integration!

Many thanks in advance for your help,
Tom

I don't keep any receipts for my lunch/ subsistence. I work away, so claim this every day.

I opened a Tide account and lobbed some money into it. I use this account to pay for every meal, drink, sandwich that I purchase as an expense. I only use it for this. The statements clearly shows where, when and how much. This is far better for HMRC than any faded receipt in a drawer and less hassle than even photo copying or scanning receipt and attaching to my Freeagent accounts.

The only receipts I have to keep are those that I have to pay cash for - eg. taxi.

[heyya99]

Do you claim travel costs? I would feel inclined to ask why they think it's a grey area.

Yes, up to the 24 month rule.

[mudskipper]

Advice from SJD, to me:

Subsistence is a bit of a grey area. Technically if you are in any temporary office, you can potentially claim subsistence, however, if going to the same location every day we recommend not to claim this.

Do you claim travel costs? I would feel inclined to ask why they think it's a grey area.

[TheCyclingProgrammer]

Advice from SJD, to me:

Subsistence is a bit of a grey area. Technically if you are in any temporary office, you can potentially claim subsistence, however, if going to the same location every day we recommend not to claim this.

Poppycock.

[MrButton]

Advice from SJD, to me:

This is as far as I got.

[heyya99]

Advice from SJD, to me:

Subsistence is a bit of a grey area. Technically if you are in any temporary office, you can potentially claim subsistence, however, if going to the same location every day we recommend not to claim this.

[TheCyclingProgrammer]

Wow, 5 pages of back and forth over something relatively uncontroversial. As several people have said and backed up with references you can claim the cost of meals taken while working at a temporary workplace.

It’s not a grey area. If you have to purchase a meal whilst working at a temporary workplace then it’s an additional cost incurred that you wouldn’t have otherwise. The rules are different if you’re self employed but the rules for subsistence for directors and employees is pretty well defined. TLDR; subsistence follows the rules for travel. If the latter is claimable then so is the former.

It’s not going to appear on your tax return either because allowable travel and subsistence claims are covered by an exemption and therefore don’t go on your P11d.