Subsitance claims

Dsindle

Hi All

Ive just taken on accounts for a LTD company which consists of just one person and noticed that his subsistance is quite considerable each day, around £15 to £20 per day. However the work does require him to be out and about all day.

So i just wondered if anyone could shed some light onto whether or not there is a limit for subsistance claims? Ive had a look on HMRC Website but cant find anything.

I know from the company i do my 'day job' at, they have a policy of £5 breakfast, £5 lunch and £10 Dinner which have certain rules as to the times in which these can be claimed, i.e Breakfast claims but be for working pre 7am, and dinner claims for post 8pm......are these just company policy or HMRC guidelines??

Any advise would be appreciated.

JamesB

We have the same policy and it is a HMRC guideline.

PGM

Its a good tax relief to claim, as long as you can prove;

"Travel expenses include subsistence costs attributable to the journeys."

Always a strange one, wouldn't he eat if he stayed in the office....

jamesm96

PGM wrote: »

Its a good tax relief to claim, as long as you can prove;

"Travel expenses include subsistence costs attributable to the journeys."

Always a strange one, wouldn't he eat if he stayed in the office....

That's exactly how I've always felt - you'll always eat three meals a day, what difference does it make where you eat it?

HMRC's website at http://www.hmrc.gov.uk/paye/exb/a-z/t/travel.htm#1 explains that business travel costs include subsistence costs, such as meals.

Then HMRC's helpsheet 490 gives a bit more guidance, explaining that payments to employees must be made to the extent that the expenses are actually incurred (see para 5.3)

However, HMRC’s guidance at BIM47705 says that employee expenses are only allowable if they are incurred ‘wholly and exclusively’ for business purposes. Seeing that everybody needs to eat, it is difficult to argue that a lunch expense has been incurred ‘wholly and exclusively’ for business purposes.

That guidance then caveats that by saying that there will, though, be occasions where an employee or director incurs additional costs for lunches and the like, such as where an occasional business journey is required (i.e. where it is not in the course of the individual’s normal working day to make such a journey). In which case, modest expenses are allowable. (See BIM47705 mentioned above).

So as I see it, if the guy is always out of the office, then I don't see that HMRC will allow any subsistence, whereas if he's usually office based then subsistence on those occasions when he is out of the office will be allowed.

Have I read that right, do you think?

groundy

You can not claim round sum amounts without a dispensation from HMRC. You can claim the benchmark rates as mentioned above or submit a sample of receipts for subsistence and make a claim for the sample to be used as guide to the average amount. I find it easier to request that any subsistence has a receipt and is claimed as an expense at the end of the month.

jamesm96

Yeah I have a couple of clients who have a dispensation - very useful! However I've not applied for any recently and I understand they're difficult to obtain now.

deanshepherd

jamesm96 wrote: »

Yeah I have a couple of clients who have a dispensation - very useful! However I've not applied for any recently and I understand they're difficult to obtain now.

Every single client of mine has a dispensation and I find they are issued as a matter of course now, whereas previously it was down to luck of the draw which tax office dealt with the application.

jamesm96

deanshepherd wrote: »

Every single client of mine has a dispensation and I find they are issued as a matter of course now, whereas previously it was down to luck of the draw which tax office dealt with the application.

Actually, now that you mention it, I'm pretty sure my thinking that it's now tricky was because of an article in our favourite tax journal!

deanshepherd

Haha.. it must be true!!

jamesm96

deanshepherd wrote: »

Haha.. it must be true!!

Actually, and I'm not kidding, when you said yours go through fine, my thought process was literally "where did I here that then..? Oh yes, in that magazine... it's probably wrong then, go with what Dean said."