Travel and Subsistence

T.C.T.C. Experienced MentorPosts: 1,448Registered, Tutor
Can someone help me here.
My client works abroad, in various different countries. I have told him that he can claim his flight costs, car hire, hotel bills etc, but I have disallowed the food and drink, which includes food bought for cooking, restaurant bills, alcohol, personal supplies etc - a complete mixture. He is asking me to include these because the food they drink is at the area of their work and during a particular job, so should be allowed.
I don't think so. Can anyone advise me further on this one?

:001_unsure:

Comments

  • claudialoweclaudialowe Trusted Regular Posts: 275Registered
    Hi TC

    This is a really difficult one - and each Inspector's take on it will be different. At the end of the day, I think it all comes down to "reasonable" - McDonalds et al for lunch and a reasonably priced dinner IMHO are fine but £100 **** ups are not.

    Personal stuff is not fine - I assume you mean shampoo etc - we all have to buy that.

    We don't all have to eat out every night, which is more expensive than beans on toast at home.

    Just my take on it.

    Claudia
  • DevilishbirdDevilishbird Feels At Home Posts: 56Registered
    I had this problem with our engineers who were frequenting abroad. Of course if they are working abroad they are entitled to claim a subsistance for meals and drink. However I put a complete ban on alcohol as most companies hold the policy of no alcohol to be consumed at any time and when at a customers site, for insurance purposes and that little problem that some people have of defining "how much is too much?". What I also ended up doing was giving the engineers a round flat sum allowance and dependant on how long they were out working for or away from home would calculate their subsistence based on the time away. For example over 5 hours from base, they are entitled to claim £6, this is plenty to cover a sandwich, drinks etc then over 10 hours and so on, of course that is the UK rate, I have a seperate rate for abroad. I also managed to get Inland revenue to agree to these allowances so I could get a dispensation and save the mess around with the P11D's. Hope that helps you out :001_smile:
  • T.C.T.C. Experienced Mentor Posts: 1,448Registered, Tutor
    Thanks, but this is a self-employed person, not an employer trying to claim for an employee. Do you still think that we should ask for a set amount per day away to cover food? He is away in places such as Africa for 3, 4, 5 or 6 months at a time. He wants to claim everything! I don't know what to suggest for the best. More advice would be really helpful.
  • NichNich Feels At Home Posts: 49Registered
    Hi,
    I have to deal with personal expenses and although different because its for an employee rather that a self employed person, i feel that claiming for everything is a bit excessive!
    If an employee goes away on business, at my company we have a limit for subsitance of £50 per day. This is reasonable to cover lunch and an evening emal for 1 person per day. I would suggest putting a limit on the daily amount which can be claimed back.
  • DevilishbirdDevilishbird Feels At Home Posts: 56Registered
    Hi,
    I missed the "client" part of your message! Lol. The best thing that I would do is to contact your local Inland Revenue and see what they suggest. The reason for this being that if they decide to do an inspection at some point in the future on your client then you have what they told you as your back up evidence. When I applied to give a round flat sum allowance I had to take the last 3/4 months worth of expenses and calculate what the average was on the allowable expenditure which in turn gave me a daily rate. I then submitted this to Inland Revenue and we agreed a rate. This was done for dispensation purposes but it wouldn't hurt to speak to them as they are pretty much a law unto themselves from time to time :001_rolleyes:
  • T.C.T.C. Experienced Mentor Posts: 1,448Registered, Tutor
    Thank you. I think a letter to HMRC is the only way to keep my client happy. Not exactly got alot of time now though have we!!!:001_unsure:
  • DevilishbirdDevilishbird Feels At Home Posts: 56Registered
    Well no time is not on your side there, thats for sure but at least you know you will be prepared for next year's return :001_smile: Hope all goes well :cool2:
  • deanshepherddeanshepherd Font Of All Knowledge Posts: 1,809Registered
    A couple of pages of HMRC's Business Income Manual are worth a read for this area.

    Link 1
    Link 2

    Useful index references here.
  • T.C.T.C. Experienced Mentor Posts: 1,448Registered, Tutor
    Thanks for those links. Now I am confused. One link states 'this does not extend to overnight accommodation and subsistence at the base of business operations, even if there is a contractural require:confused1:ment for the trader to reside in a particular place', where the other link that an individual resident in the UK spends time abroad on business the cost of living will NOT be disallowed. Help!
  • deanshepherddeanshepherd Font Of All Knowledge Posts: 1,809Registered
    T.C. wrote: »
    base of business operations

    This is presumably in the UK for your client?
  • blobbyhblobbyh Font Of All Knowledge Posts: 2,415Registered
    Can I ask a really dumb question here? I know the "wholly, exclusively, whatever" thing but does anyone here - or know of anyone else who does - buy food for their employees who are doing overtime?

    I'm being hassled to provide funds for people to eat pizzas, burgers etc even though they're only working up to say 8 or 9pm - their working day finishes at 5pm. In my opinion, the extra 3 or 4 hours work - for which they get premium rate anyway - isn't justification enough for spending near on £50 a night. Or am I just being a skin-flint?

    Any advice or can anyone point me in an official direction?

    Many thanks!
  • CullenCullen Experienced Mentor Posts: 592Registered
    That is a decision that you make based on whether your business will benefit from the expenditure.
  • DevilishbirdDevilishbird Feels At Home Posts: 56Registered
    Robert, do they get an extra break-time when doing these overtime hours? If so then they can buy or eat their own food.
    Again like I said to T.C earlier it might be best to clarify with IR. I know that business can provide free/subsidised meals on premises but am not sure if this applies only to canteens? (and it has to be applied to all employees)
  • T.C.T.C. Experienced Mentor Posts: 1,448Registered, Tutor
    Hi Dean Shepherd. Yes the business base is UK, but the work is 99% outside the EU, in various different countries. Sometimes one month, sometimes 6 months.
  • PaulPSBPaulPSB Feels At Home Posts: 55Registered
    T.C. wrote: »
    Can someone help me here.
    My client works abroad, in various different countries. I have told him that he can claim his flight costs, car hire, hotel bills etc, but I have disallowed the food and drink, which includes food bought for cooking, restaurant bills, alcohol, personal supplies etc - a complete mixture. He is asking me to include these because the food they drink is at the area of their work and during a particular job, so should be allowed.
    I don't think so. Can anyone advise me further on this one?

    :001_unsure:

    We have a similar client who often works overseas with a small team of sub contractors. We divide the cost of food & drink between the number of people on the job and declare the apportioned element on P11D for the director. Then claim identical expense for personal tax.
    This was agreed without any problem on a routine PAYE Compliance visit. A couple of years later it cropped up again during an enquiry under Corporation Tax as HMRC went after the status of the sub contractors. Again the subsistence position was agreed without any problem.

    I would add that all "personals" such as toileteries etc are dealt with under Directors loan.
  • T.C.T.C. Experienced Mentor Posts: 1,448Registered, Tutor
    Mmmm, similar, but I am talking about a self-employed person claiming against his own expenses.
  • PaulPSBPaulPSB Feels At Home Posts: 55Registered
    T.C. wrote: »
    Mmmm, similar, but I am talking about a self-employed person claiming against his own expenses.

    Sorry - your post didn't state self employment although I don't really see it makes any difference.
    To claim expenses arising in the course of employment the costs have to be incurred "wholly, exclusively and necessarily" in the course of duties. This is more onerous than under self employment where only "wholly and exclusively" tests have to be met.

    Someone has commented above that individual Inspectors might have their own view and I think that's very true. To cover yourself why not go for a "mid -point" position - put all the food and drink through and then make an adjustment for personal use - say £10 per day. Suggest to the client this is a reasonable cost for eating & drinking if he was at home rather than away on business and that HMRC will want to see some personal element.

    That way the client is happy and you have the basis of an argument when HMRC come along :001_smile:
  • deanshepherddeanshepherd Font Of All Knowledge Posts: 1,809Registered
    TC did state that her client was self-employed in her second comment.

    I would advise against arbitrary adjustments as these are likely to be dismissed in any future enquiry. You may even have Caillebotte v Quinn quoted back at you if you try to apportion any claim in relation to food. Long gone are the days of agreeing a practical treatment with a local inspector.

    I would advise the client that this is a grey area but in your opinion if your client claims excessively for the entire costs then they are all likely to be disallowed if he is subject to an enquiry at some point in the future.

    I would advise that he limits his claim to breakfast and dinner only and does not claim for meals or snacks at other times of day and certainly not for unaccompanied drinks.

    If he still wishes to claim everything on the grounds that he believes it is allowable for tax purposes then that is entirely up to him. You have exonerated yourself from any claim.

    You are only there to advise your client and not to make the decision for him. You should sleep easy that you have offered your best advice.
  • T.C.T.C. Experienced Mentor Posts: 1,448Registered, Tutor
    Thank you. That is really good advice and great comments. I feel better about my opinions now. Many thanks. :thumbup:
Sign In or Register to comment.