VAT on expenses processed through umbrella

[orange86]

I'm contracting for a company in the north, inside ir35 do weekly time sheets, paye processed by Paystream (umbrella)

I stayed over night at a hotel so i could attend a meeting at my work office the next day, so two days in the office.
I had to book the hotel stay through my company travel portal. I then paid the bill at the hotel reception. I submitted an expense claim form with receipt to the job agency who then forwarded on to Paystream.

Anyway, paystream only paid me the net amount, so im £40 out of pocket for the tax of the hotel room stay.
Paystream said because it's my usual place of work i cant claim VAT back which sounds crazy and im out of pocket by £45.

I only travel to the office once a week and do 4 days wfh.

Paystream said to fill a P87 form, but no garuntee i'll be paid the VAT.

Claim Income Tax relief for your employment expenses (P87)


What am i missing in this process that means im out of pocket?

[Protagoras]

What does your contract say about place of work?

If the client's office in the North is your usual place of work, I'd expect that the hotel cost is not tax-deductible.

[orange86]

What does your contract say about place of work?

If the client's office in the North is your usual place of work, I'd expect that the hotel cost is not tax-deductible.

Yes, it's my usual place of work The agreement is i drive to the office once a week. 1hr 40 min drive each way...

how is this fair i have to pay the vat for staying at the hotel, yet if i was employed directly by the company, they would their travel portal would cover the cost with a virtual card payment, but for contractors its a separate story?

[eek]

Yes, it's my usual place of work The agreement is i drive to the office once a week. 1hr 40 min drive each way...

how is this fair i have to pay the vat for staying at the hotel, yet if i was employed directly by the company, they would their travel portal would cover the cost with a virtual card payment, but for contractors its a separate story?

Because if you were employed by the company and working based at that office you technically can't claim expenses.. The fact the company allows it is something that HMRC would investigate were it known.

And umbrella firms are continually investigated by HMRC for expenses so it's not surprising that most umbrellas have clear cut expenses rules that they carefully follow to the letter.

[Protagoras]

Yes, it's my usual place of work The agreement is i drive to the office once a week. 1hr 40 min drive each way...

how is this fair i have to pay the vat for staying at the hotel, yet if i was employed directly by the company, they would their travel portal would cover the cost with a virtual card payment, but for contractors its a separate story?

If the company is paying expenses to its employees for attending their normal place of work, then such expenses should, I think, be categorised as Benefit in Kind and reported as such via a P11D. The employees will then be taxed on the benefit.

I don't think it's just the VAT that's questionable here; I don't think that the pre-VAT hotel costs properly count for tax-free expenses. As such, I think you should be getting a P11D from the Umbrella company.

[lucyclarityumbrella]

I'm contracting for a company in the north, inside ir35 do weekly time sheets, paye processed by Paystream (umbrella)

I stayed over night at a hotel so i could attend a meeting at my work office the next day, so two days in the office.
I had to book the hotel stay through my company travel portal. I then paid the bill at the hotel reception. I submitted an expense claim form with receipt to the job agency who then forwarded on to Paystream.

Anyway, paystream only paid me the net amount, so im £40 out of pocket for the tax of the hotel room stay.
Paystream said because it's my usual place of work i cant claim VAT back which sounds crazy and im out of pocket by £45.

I only travel to the office once a week and do 4 days wfh.

Paystream said to fill a P87 form, but no garuntee i'll be paid the VAT.

Claim Income Tax relief for your employment expenses (P87)


What am i missing in this process that means im out of pocket?

All sounds a bit odd - first of all was it a cost reimbursed by the end client? If it was then the receipt would need to be a VAT receipt. The agency may only pay the NET figure to Paystream, but as long as they have a valid VAT receipt they should be able to reclaim the VAT to pay out the total cost reimbursed to you.

Expenses are such a headache. As an individual you would not be able to relcaim the VAT. If you dont have a valid VAT receipt and Paystream only receive the NET from the agency, then you are only likely to receive the NET back.

Does that make sense?

This sounds more like a reimbursement rather than being taxed on a commute? Please correct me if I am wrong?

[eek]

All sounds a bit odd - first of all was it a cost reimbursed by the end client? If it was then the receipt would need to be a VAT receipt. The agency may only pay the NET figure to Paystream, but as long as they have a valid VAT receipt they should be able to reclaim the VAT to pay out the total cost reimbursed to you.

Expenses are such a headache. As an individual you would not be able to relcaim the VAT. If you dont have a valid VAT receipt and Paystream only receive the NET from the agency, then you are only likely to receive the NET back.

Does that make sense?

This sounds more like a reimbursement rather than being taxed on a commute? Please correct me if I am wrong?

It's a reimbursement to allow the OP to be in their home office on say Wednesday & Thursday without going home on Wednesday night and travelling back Thursday morning. As such you can see why the umbrella may be nervous to treat it as anything except an additional payment from the agency because were HMRC to ask questions the answer wouldn't look good..

[orange86]

All sounds a bit odd - first of all was it a cost reimbursed by the end client? If it was then the receipt would need to be a VAT receipt. The agency may only pay the NET figure to Paystream, but as long as they have a valid VAT receipt they should be able to reclaim the VAT to pay out the total cost reimbursed to you.

Expenses are such a headache. As an individual you would not be able to relcaim the VAT. If you dont have a valid VAT receipt and Paystream only receive the NET from the agency, then you are only likely to receive the NET back.

Does that make sense?

This sounds more like a reimbursement rather than being taxed on a commute? Please correct me if I am wrong?

I commute once a week, usually Tuesdays which is 1hr 40min each way if traffic is flowing. It's quite exhausting at the end of the working day.

My client i'm working at authorised my expenses. I had the hotel email me the VAT invoice. My manager approved this on email and was forwarded on to my job agency who then sent on to Paystream.

Why am i having to pick up the VAT when my manager authorised the company / client will pay for it all?

[lucyclarityumbrella]

Unfortunately, based on what you have said it looks like a regular commute travelling on the same day each week to the same place, as such the HMRC rule would see that as a benefit, and as such it would need to be taxed.

[northernladuk]

I commute once a week, usually Tuesdays which is 1hr 40min each way if traffic is flowing. It's quite exhausting at the end of the working day.

My client i'm working at authorised my expenses. I had the hotel email me the VAT invoice. My manager approved this on email and was forwarded on to my job agency who then sent on to Paystream.

Why am i having to pick up the VAT when my manager authorised the company / client will pay for it all?

You need to flip this on it's head and consider yourself lucky. You client paying expenses for your commute? That's like hens teeth and you are very lucky they do. I can't see for one minute why the should personally, particularly for such a short commute just once a week. No one else in the country gets expenses for commuting.

If I were you I'd swallow the VAT and consider myself lucky that the only thing I have to pay for to be in a very well paid WFH role is the VAT. It's peanuts. Move on.