Reply to: subsistence receipts - umbrella companies

[LisaContractorUmbrella]

yeah think they were card payments and the rest of my receipts are consistent so could prove the purchases for me- we are talking small amounts of cash so it wouldn't even be an issue paying the tax back but I don't want to run foul of them

cheers

I think, under those circumstances, you should be fine. You are right to be concientious though

[2BIT]

Do you have any other way of proving the expenditure?? Credit card statement?

If the expenditure was regular and you had receipts for all the other instances then I doubt that even HMR&C would make an issue of it - if it was a one off or of significant value it would be queried.

yeah think they were card payments and the rest of my receipts are consistent so could prove the purchases for me- we are talking small amounts of cash so it wouldn't even be an issue paying the tax back but I don't want to run foul of them

cheers

[LisaContractorUmbrella]

what should I do if I have lost a few receipts but already claimed the expenses. I'm normally really anal about keeping receipts but have entered some expenses and then only later found that I couldn't find a few receipts- we are talking two single receipts out of hundreds but don't know what would happen if I get audited.

Do you have any other way of proving the expenditure?? Credit card statement?

If the expenditure was regular and you had receipts for all the other instances then I doubt that even HMR&C would make an issue of it - if it was a one off or of significant value it would be queried.

[2BIT]

what should I do if I have lost a few receipts but already claimed the expenses. I'm normally really anal about keeping receipts but have entered some expenses and then only later found that I couldn't find a few receipts- we are talking two single receipts out of hundreds but don't know what would happen if I get audited.

[LisaContractorUmbrella]

The umbrella company should be asking to see receipts on a random basis if they are offering a scale rate subsistence payment e.g. £20 per day as they need to be able to prove to HMR&C that the daily allowance is actually realistic and that the people claiming it are actually entitled to it.

[AnthonyQuinn]

Umbrellas attract people away from running a LTD company which means the umbrella does most of the admin and HMRC can audit a handful of umbrellas from time to time rather than 100s of thousands of workers who are self employed or running LTD companies. The compromise from HMRC is to allow umbrellas a generous dispensation to encourage not to set up as LTD/Self Employed.

I agree.HMRC will look at Umbrella's records, find, say the 5 highest expense claimants, and get after them.

I dont quite see how 'name and shame' comes in here, even as a figure of speech. this umbrella is more responsible than others as its making it clear that you need to retain your receipts.

The only issue is if the Umbrella co. goes bust. Then tax cheats get off because they claim that they had sent receipts to the umbrella and no-one's there to verify.

[Wanderer]

Most umbrella companies don't ask to see the receipts. The one mentioned by the OP does. I asked him to name and shame.

I doubt that the umbrella company actually asked to see receipts, only that receipts be kept and that they would audit a selection of claims. That's the way they all work...

jayshah9 the way umbrellas work is that they get a dispensation from HMRC to allow people to claim a certain amount, in theory this saves a load of paperwork. One of the conditions of this dispensation is that they don't have to check every claim but they are required to audit a selection of the claims and make sure that the claims are backed up by receipts.

The reality is that umbrellas all pay you exactly the same amount of money out of your gross income. This means that the only way they can really sell their services is based on how generous their expenses dispensation is and encourage people to claim right up to the limit of the dispensation. While people are supposed to have receipts for all this, it's all done on a nudge and a wink. Outwardly they have to make a big noise about keeping receipts to keep HMRC happy but just quietly they don't check and they allow (or even quietly encourage) people to abuse the dispensation right up to the limit to reduce tax.

So, what would happen if the umbrella did decide to audit you? Umbrellas will be forced to deny all this (they would, wouldn't they) but here's my take on what might happen:

1. They might just give the worker a warning and still allow the expenses anyway because, hey it was a genuine mistake. Don't do it again.
2. They may disallow the expenses and the worker would have to pay the tax as if they had never claimed them (and they probably didn't exist anyway so no loss).
3. They may report the worker to HMRC for investigation and the worker could turn on the umbrella and tell HMRC that systematic abuse of the expenses dispensation was widespread and they were actively encouraged to do it, though always in a way that could be subsequently denied by the umbrella. This would cause a load of grief for the umbrella and they won't want that. The worker may have to repay the tax, possibly plus interest and penalties. They umbrella may be investigated and lose their dispensation which which would destroy their business almost instantly.

Although they feel the need to rattle their sabres at times, I think HMRC is quietly tolerating umbrellas and their dispensations. Why? Because it keeps a very large number of problematic freelance/self employed workers working under the umbrella system so they can keep an eye on them. If it weren't for umbrella companies then they would scatter every which way and a large number of them would go and form limited companies (and claim all sorts of stuff). This would be very hard to police because they are all separate entities and would have to be investigated individually which would take a lot of resources.

Umbrellas attract people away from running a LTD company which means the umbrella does most of the admin and HMRC can audit a handful of umbrellas from time to time rather than 100s of thousands of workers who are self employed or running LTD companies. The compromise from HMRC is to allow umbrellas a generous dispensation to encourage not to set up as LTD/Self Employed.

[malvolio]

When I signed up with an umbrella co they rang me up and urged me to claim my £15 a day. They seemed confused when I told them I didn't want to keep a shedload of receipts.
Do they get to claim back the VAT or something?

It's £10 a day if you stay overnight, isn't it? Anyway, since the money is a lump sum allowance to cover incidental low cost oddities like phone calls home, newspapers and the like, who is going to give you a receipt anyway?

[NotAllThere]

wrong section.....

Fixed that.

[Zippy]

When I signed up with an umbrella co they rang me up and urged me to claim my £15 a day. They seemed confused when I told them I didn't want to keep a shedload of receipts.
Do they get to claim back the VAT or something?

[Churchill]

I'm sober.

"Name and shame" implied they were doing something immoral or illegal. I don't think they're doing either.

Most umbrella companies don't ask to see the receipts. The one mentioned by the OP does. I asked him to name and shame.

It's a figure of speech.

[RichardCranium]

It was a figure of speech.

Lay off the beer for a while.

I'm sober.

"Name and shame" implied they were doing something immoral or illegal. I don't think they're doing either - they were telling him why he needs to keep receipts. Although they are a bit lazy.

[Churchill]

Is there shame involved?

The brollies make it clear it is our responsibility to get receipts, and only claim for things where we have receipts, and that it is our problem and not theirs if Hector comes sniffing.

That they keep their costs down by not bothering to check them, and their customer's postal costs down by not asking for them, and their customer's stress levels down by not being a pain in the arse arguing the toss over each of them, makes them sound more attractive as a brolly to me.

It was a figure of speech.

Lay off the beer for a while.

[RichardCranium]

Name and shame.

Is there shame involved?

The brollies make it clear it is our responsibility to get receipts, and only claim for things where we have receipts, and that it is our problem and not theirs if Hector comes sniffing.

That they keep their costs down by not bothering to check them, and their customer's postal costs down by not asking for them, and their customer's stress levels down by not being a pain in the arse arguing the toss over each of them, makes them sound more attractive as a brolly to me.

[Churchill]

The umbrella company I work through keep on sending me emails warning me that they will check my subsistence receipts in the future. However they still have not requested them. None of my colleagues have ever been asked to produce their subsistence receipts. Has anybody heard of umbrella companies asking for these receipts.

Name and shame.