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Invoices For Expenses When Inside IR35

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    #11
    question

    are you being paid NET by your agent, or getting the gross invoice amount and then paying it all out as caught under IR35?

    Comment


      #12
      Originally posted by Wary View Post
      Thanks for the latest info. Looks like my accountants have messed up big-style.

      Won't name names at this stage but they're one of the big-boys. This goes back to at least the beginning of 2016/17.

      What course of action do I have to be put back into the position in which I would now be if it had been done correctly? ... either via HMRC if possible or compensation from the accountants? Thanks
      I'm presuming that this is because the accountant wasn't aware that the travel was 'one off' type travel to places other than your main place of work. I am assuming this because the rules changed where as previously all travel to a temporary location was allowable and now it is only allowable to places other than your main place of work (deemed permanent under IR35).

      In theory this should be correctable, the March 2017 salary could be recalculated to take into account the allowable travel costs and an earlier year update sent to HMRC to advise them of this. Depending on your year end amended accounts/CT600 may have to be prepared too. Current year is easy to correct, just do this in the February or March payroll run depending on how your salary is calculated each period.

      HTH

      Martin
      Contratax Ltd

      Comment


        #13
        Originally posted by ContrataxLtd View Post
        In theory this should be correctable, the March 2017 salary could be recalculated to take into account the allowable travel costs and an earlier year update sent to HMRC to advise them of this. Depending on your year end amended accounts/CT600 may have to be prepared too.
        That's interesting - I know it wasn't my query but still interesting and potentially helpful for me too.

        Comment


          #14
          Thanks all for the responses. Unfortunately the main amount relates to 2016/17 for which the accounts have been filed. Alas this could have been nipped in the bud when they were still in the draft stage as I did question it with the guy who prepared these accounts, saying this didn't seem right. His response "It does seem very restrictive and potentially unfair I can see that, however due to HMRC tightening their grip on all things IR35, there are very few qualifying IR35 expenses these days which can be deducted when calculating your salary. It is pretty much just down to pension contributions, childcare and professional indemnity insurance. Everything else has to come out of the 5% ..."

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            #15
            Originally posted by tarbera View Post
            are you being paid NET by your agent, or getting the gross invoice amount and then paying it all out as caught under IR35?
            I have to invoice the agency for the gross amount as shown on the receipts (can't add VAT on top of this) and this is what they reimburse. It is this amount (minus the flat VAT & 5%) which goes into the salary calculation. So I was already aware that I'm losing out on these expenses due to being on Flat VAT, but didn't realise until more recently that I was also losing out due to them treating these as non-qualifying.
            Last edited by Wary; 16 February 2018, 11:55.

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              #16
              Originally posted by ContrataxLtd View Post
              I'm presuming that this is because the accountant wasn't aware that the travel was 'one off' type travel to places other than your main place of work.
              They should have been aware as I actually e-mailed my accountant in April 2016 to inform him that these occasional trips (with the occasional overnight stay) were not to my usual place of work, to check that I'm still OK to claim these despite the change in rules ... to which he confirmed I can.

              The overnight subsistence claims probably averaged less than one a month (for typically 1 or 2 nights a claim), so these clearly weren't for my usual place of work.

              Comment


                #17
                Originally posted by Wary View Post
                I have to invoice the agency for the gross amount as shown on the receipts (can't add VAT on top of this) and this is what they reimburse. So I was already aware that I'm losing out on these expenses due to being on Flat VAT, but didn't realise until later that I was also losing out due to them treating these as non-qualifying.
                No I meant your monthly invoice not your expenses.

                Did agent run your payroll ?

                Comment


                  #18
                  Originally posted by tarbera View Post
                  No I meant your monthly invoice not your expenses.

                  Did agent run your payroll ?
                  Apologies. No, the agency just pay the monthly gross invoices into the company account. My accountants run the payroll.

                  Comment


                    #19
                    That quote from when you raised the concern is so pertinent. That guy was just completely incorrect. I think it's Serious Complaint time. I assume you've got that in an email since you've quoted it like that? In which case it's pretty clear-cut - and very bad for them

                    I was on my phone when I replied last night so didn't bother getting a link but here are the steps in the Deemed Employment Calculation. It's in Step 3 that you get the deduction for allowable expenses;

                    https://www.gov.uk/guidance/how-to-c...oyment-payment

                    If you were a permie employee based at Office A with occasional travel to Office B, Office B travel would be an allowable expense. The calculation is really quite simple and how the accountant screwed this up I don't know. But as I've said, sadly my experience is that one major chain accountancy firm and one small contractor specialist I have had personally recommended, have consistently failed to understand IR35 properly and service my needs properly operating inside IR35. I don't want to slate all accountants, which would be wrong. But IMHO what's going on here is we are operating in a market still saturated (though changing obviously, thanks to the public sector rule changes) with people operating outside, which means more risk of accountants missing something when you're inside. Even though this in particular is SO bleedin' simple.

                    But on the positive side, seems like you are going to be able to correct it, or rather they are. I think best way is to approach them with the evidence of their mess-ups and let them sort it out with HMRC, and eventually it'll work its way through to a rebate or you clawing it back over time (I assume).

                    Comment


                      #20
                      Originally posted by Wary View Post
                      Apologies. No, the agency just pay the monthly gross invoices into the company account. My accountants run the payroll.
                      And did you pay these incurred expenses personally or via company credit card?

                      Just as a side note, who declared this contract inside IR35?

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