Reply to: Regarding expenses

[northernladuk]

Has PeterSim come to terms with the rules around travel yet?

[hari]

Cheaper renting a room..

Renting a room is more expensive

[hari]

Golden rule of contracting. Check out the travel time and costs before agreeing a rate.

Initially it was Outside IR 35. Suddenly they changed to Inside IR35. Agents are pushing me to select one from their own list of Umbrella companies. This is where I was struck

[hari]

£745 a MONTH? Where th are you traveling to/from??

Travelling from Stoke On Trent to Milton Keynes

[LondonManc]

If I'm having to use my own equipment then I'd expect some sort of outside leaning. They can provide their own bleddy equipment if they want me inside IR35! Or at least pay me some extra day rate to cover purchase thereof.

[wattaj]

Yes I agree on the fair use part. Unfortunately he doesn't understand the difference between business use by his company and using it for work when not using his company.

Agreed.

[WTFH]

I think that we should clarify one small point for little Pete: fair, personal use of a company equipment (e.g. a laptop) is allowed. BUT, one cannot buy equipment exclusively for personal use via the company.

Yes I agree on the fair use part. Unfortunately he doesn't understand the difference between business use by his company and using it for work when not using his company.

[wattaj]

...So, if you want to take a laptop that is owned by a company, and then use it yourself for personal use (or for other companies), then you (personally) need to buy it off the first company...

I think that we should clarify one small point for little Pete: fair, personal use of a company equipment (e.g. a laptop) is allowed. BUT, one cannot buy equipment exclusively for personal use via the company.

[WTFH]

Yes but if you don't know a contract is going to be inside or outside. You can't exactly stop using a laptop because it was bought through an LLC and now HMRC have forced you to be an employee. Doesn't seem reasonable.

I understand the "wholly, exclusively, and necessarily".

I also understand you can probably get away with using it, I am more making a though experiment, to point out how muddy it is when HMRC are forcing owners of LLC to become employees. It is like a communist country.

Nope, not like a communist country. It's all about preventing people who are effectively permanently employed from avoiding paying fair taxes. Unfortunately it is so badly written that it also catches out the few of us who genuinely contract.

Your thought experiment answer:
You should stop using items that are owned by a company if you are not working for that company.
Doesn't matter whether it's your company or someone else's.

Imagine this: You get a contract/job/whatever with Barclays bank. They supply you with a laptop to do the job. You finish working for them and go to work for Lloyds.
Who owns the Barclays' laptop?
If Barclays ask for it back, would you say "no, I need it for Lloyds"?

So, if you want to take a laptop that is owned by a company, and then use it yourself for personal use (or for other companies), then you (personally) need to buy it off the first company. Generally the price you pay should be fair market value, or it can be based on the depreciation rate that the company uses (perhaps 33% per year)

This has nothing to do with IR35, and everything to do with running a business.

[wattaj]

Yes but if you don't know a contract is going to be inside or outside.

Look, here's the deal: take your finger off the "Buy Now" button and decide if you need this mythical laptop in order to run your business. If "yes", then "buy now", else "no", stop wasting our time.

Your business will incur expenses regardless of any contract's status. They are TWO separate things. Act accordingly.

The only thing that you need to worry about is that you can no-longer claim expenses for inside IR35 roles.

Happy?

[PeterSim]

Yes but if you don't know a contract is going to be inside or outside. You can't exactly stop using a laptop because it was bought through an LLC and now HMRC have forced you to be an employee. Doesn't seem reasonable.

I understand the "wholly, exclusively, and necessarily".

I also understand you can probably get away with using it, I am more making a though experiment, to point out how muddy it is when HMRC are forcing owners of LLC to become employees. It is like a communist country.

[wattaj]

It is just an example, to see where expenses fall when moving between inside and outside.

Simple rule: business expenses must be "wholly, exclusively, and necessarily" for use in the business or in the pursuit of that business' activities.

[WTFH]

Say for example. I am working outside IR35 and buy a laptop and put it through expenses. Then my next role is inside IR35 and i use the laptop, is that a problem? Say for example it is an ongoing expense because I pay monthly over 2 years but the second year I am working inside IR 35 but still paying the expense of the laptop on my LLC.

It is just an example, to see where expenses fall when moving between inside and outside.

OK, let's go back to what was said earlier: buying it as a business expense. If your company is buying it as a business expense, then it is to be used by the LLC.
If you're buying it through your company, but then don't use the company, then strictly speaking you should not be using the laptop. You certainly should not be using it when working through/for a different company.
The other company should be supplying you with the equipment you need to do your job for them.

i.e. no, you can't go shopping now and buy loads of stuff through your company then expect to use it for the next year wholly and exclusively outside of your LLC. That's the complete opposite of the rules.

[wattaj]

Say for example. I am working outside IR35 and buy a laptop and put it through expenses. Then my next role is inside IR35 and i use the laptop, is that a problem? Say for example it is an ongoing expense because I pay monthly over 2 years but the second year I am working inside IR 35 but still paying the expense of the laptop on my LLC.

It is just an example, to see where expenses fall when moving between inside and outside.

Who's going to know?

Use your judgement; you're a big boy now.

[PeterSim]

Say for example. I am working outside IR35 and buy a laptop and put it through expenses. Then my next role is inside IR35 and i use the laptop, is that a problem? Say for example it is an ongoing expense because I pay monthly over 2 years but the second year I am working inside IR 35 but still paying the expense of the laptop on my LLC.

It is just an example, to see where expenses fall when moving between inside and outside.