Chargeable expenses across tax years

[Acme Thunderer]

I've recently been on a business trip on behalf of my client. The client has fully reimbursed the expenses Hotel, Travel and Meals which got paid by my agency to my Umbrella company in March. My umbrella company then treated the expenses as income and deducted ER and EE National Insurance along with Income tax from the expenses. This was while they worked out if the expenses were allowed - they blatantly were. They have come back and said the expenses are allowed but as this decision was made in the new tax year they can't refund any of the deductions. Instead I have to go through the P87 form route to get back the Tax. There is no means to get back the National Insurance Contributions that have been made. The expenses were for about £1000 so you can imagine how much the deductions were.

Is what the umbrella company doing correct or is it in the too difficult pile and they are trying to fob me off?

[lucyclarityumbrella]

It's complex and massively down to what is noted on the business to business contract between the umbrella and agency in terms of contractual location of work, we also have to look at whether the travel is regular to determine if it is taxable. Looks to me like either the contract means you are expected to do that travel as part of the assignment or the umbrella does nto have a rigorous expense proceedure in place to determine if it needs to be taxed or not.

[Acme Thunderer]

It's complex and massively down to what is noted on the business to business contract between the umbrella and agency in terms of contractual location of work, we also have to look at whether the travel is regular to determine if it is taxable. Looks to me like either the contract means you are expected to do that travel as part of the assignment or the umbrella does nto have a rigorous expense proceedure in place to determine if it needs to be taxed or not.

Thanks Lucy. The umbrella company agreed that the expenses where allowable. Its just they taxed the expenses in March and then decided in April they were allowable and are saying go get your money from HMRC. Income tax I should be able to get back eventually but not the extra Employers NI they took out of the expenses.

I suppose I'll have to put it down to experience and never put an expense claim in close to the end of the tax year

[lucyclarityumbrella]

They should be able to do a year end adjustment - probably just easier to put it back to you rather than using HMRC's adjustment tool