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shahsy
27th March 2004, 10:16
I have just started a contract and I'm just signing up with a known umbrella company.

They claim to have inland revenue dispensation for some non-receipted expenses (daily subsistence in my case for working over 10 hours per day).

My question is would it be unreasonable for me to actually see the dispensation letter from the IR?

Am I correct in assuming that I am potentially liable for additional taxes etc should the IR question things? Am I not an employee of the umbrella company? Do I have any redress if the IR start knocking on my door somewhere down the line?

Your thoughts would be appreciated

s

Cojak
27th March 2004, 17:11
Read previous posts on umbrella co's. (Generally under "DON'T TOUCH xxx WITH A BARGE POLE!!!!!")

There's more info on this

jmiom2004
27th March 2004, 21:45
Any reputable co, will show you a copy of the dispo from the IR. If they have one.

Have a look around a few different ones though.

Some claim to have dispos for all sorts of expenses, and then when you go to sign up, they want receipts for everything.

planetit
29th March 2004, 08:25
Even with a dispensation, the expenses still have to be incurred by you “wholly and exclusively” in the conduct of your business. The dispensation just means the umbrella company doesn’t have to put it on your P11D. If you didn’t actually incur the expenses legitimately, then yes, the IR could come after you.


P.S. If you are not an employee of the umbrella they wouldn’t give you a P11D. so the dispensation is worthless (?)

Contractorumbrella
29th March 2004, 09:36
Hi Shahsy,

You were quite right to question this. Planetit is correct when he says that a dispensation from the IR just means that expenses do not have to be reported on a P11D. If you just bear in mind that the IR never give something for nothing you won't go far wrong. The susbsistence (or non-receipted allowance) for 10 hours a day would apply to most people and the IR do not give you money just for going to work which is what this actually amounts to. I would certainly ask for something in writing to confirm that you would have no additional liability.

passthevas
5th April 2004, 20:16
The dispensation issue is a bitter feud between umbrella companies, with who can get the biggest without the need for receipts. Single employee cos can get the same dispenastions its not magic, you just have to show you have an auditable expense control system. The best Dispensations I have seent are P4's where they have agreed with the IR that you just have to run a log book for 6 weeks, buy a lunch & Dinner. and you can claim £21. Just ripe it-off and use it in your own ltd

it would be nice for somewho uses P4 to inquire with the IR what is the status of the £21 with respect to the employee. (is it taxable)

malvolio
5th April 2004, 23:31
No, it's not taxable because it's fraud, dummy.

You can only claim expenses you have wholly and genuinely incurred in the execution of your trade. You can't claim money you haven't actually spent.

What part of illegal do you people not understand, FFS?

passthevas
6th April 2004, 08:56
malvolio, don't get abusive, I don't know what your qualifications are but I'm sure mine are far superior to yours in this area.

Have you asked the IR the question?

So all those civil servants who investigate contractors committing fraud by cliaming the 21 per diam, but not spending every penny? sounds like a conflict of interest to me. I question you could ask them at your next audit to get really going.

I suggest you look up the meaning of dispensation in the english dictionary, before you start alledging fraud.

its no more fraud than you cliammig your 100% tax deduction for your PC. when you play games on it and it is a capital item and be deducted over the its life time(3-5 yrs).

,

malvolio
6th April 2004, 09:23
dispensation (PERMISSION) noun [C or U] FORMAL
special permission, especially from the Church, to do something that is not usually allowed
But that is not the legal definiton in the sense you are using it, is it, where it actually means "a particular exemption from the law in certain circumstances for the benefit of a single individual." And I'm not going to write out all the sub-qualification definitions.

OK, calm down. I'm sufficiently qualified to have an informed opinion, so up yours. I hope I understand the relevant bits of corporate and taxation law. And I'm happy to take criticism. And if you are really that smart, you might try to understand the forum name...

Where do you get the idea that you can claim £21 if you haven't spent £21, for example? The dispensation is about what the umbrella has to account for in their systems. It does not exonerate the contractor if they claim more than they spend. Some umbrellas are presenting themselves as having "dispensation" from the IR and implying that it is therefore OK to overclaim. It isn't. It's illegal. QED

Now go back to your pram.

WWW ITDoctors co uk
6th April 2004, 10:14
These so called umbrella dispensations exonerate the umbrella company but not the contractor.

It won't stop the IR doing an expenses audit on a contractor and claiming lots of money back where there are no receipts or justification for ridiculous expense claims. I've heard of umbrellas encouraging contractors to claim £75 a night for accommodation. This is presumably a sweetener for the greedy/stupid contractor to offset the poor over priced service offered by the umbrella.

Has anyone been stuffed by the IR over these so-called allowable expenses?

passthevas
7th April 2004, 08:14
Read my lips, its NOT over-claiming nothing. It is quite evident you lack a basic understanding of law and tax law in particular (i.e. you confuse “Spending” with “expense” , they are different, for example Depreciation is not money spent but it is an expense and Capital Spending are not expenses).

Now try to follow my earlier example, Of the Civil servant. I will repeat it one more time.

A civil servant working for the IR claims an allowance of £70 for accommodation and £21 for meals when they are auditing your books. They are never issued with a P11D nor do they declare it on their tax return. Are you suggesting the IR staff is engaged in fraud?

Next you need to understand that there are documents that are “primary” documents i.e. birth certificates land titles, P60s 7 P11Ds. That is what they say on the face of them the truth of the matter, I.E. Like malvolio’s birth certificate states he is a big girl therefore he is; despite having 1 meat & 2 vegs.

Now for P60 and P11D, they are declarations on income and benefit paid to an employee. Verse payslips have no standing with the IR. If your employer understates either the P60 or P11D they are in trouble. If they overstate them you try convincing the IR that they are in error, it is impossible!

Still there, Now the dispensation works as mention before because the IR say, if you have a process that has some independent verification then an employee can be paid XX as to cover accommodation and/or Meals away from home, and the amount paid does not have to appear on a P11D. The process should include “Evidence” but isn’t mandatory.

On this point you are right. The employer is exempt from any come back (but so too is the employee, why wouldn’t they, please read on)

Now moving on to the employee’s tax return, The P11D says he has received ZERO benefit, and the P60 states how much income he has received. One more time they have received ZERO benefit. The End of the Matter.

I even if you were remotely correct, let’s work it through, the IR come knocking and … and. Hmmm. I’m a little stuck here. So they say we have your tax return and we think you have under declared you income. “Here is my P60, and I have not received a P11D because I have not received any “benefits””. End of inquiry.
Or do they say you we believe you claimed money that you haven’t spent. “Sir do you mean I have received a financial benefit and my employer hasn’t put it in a P11D”; IR “NO”. So what are you saying? My P60 is incorrect; IR “NO”. Have I received money from anyone else? IR “NO”. Your & planits analysis breaks down again.

The IR has concise statements at
www.inlandrevenue.gov.uk/pdfs/ir69.htm (http://www.inlandrevenue.gov.uk/pdfs/ir69.htm)
and The P11DX form.

antagoneyes
7th April 2004, 12:47
You are a confused man passthevas and I would be impressed with your argument were it not total bollux that may confuse others.

No qualified accountant condones the claiming of unreceipted expenses and anyone that claims these is asking for trouble.

The IR allowance you talk about is a theoretical maximum paid to its employees - it would not be paid out without proper receipts.

Your comments are dangerous to yourself and others - you need to talk to a qualified accountant before you drop yourself in deep sh4t.

I have had an expenses audit by the IR and they go through everything with a fine tooth comb. If you want to take the risk then fair enough but you have been warned.

.....and where are the forum accountants when you need them??

malvolio
7th April 2004, 13:37
He's not listening.

Hey, what do I know? I'm merely a qualified but non-practising accountant with 30 years business experience on both sides of the employee/employer fence. Obviously I need to back-claim at least £37k unpaid expenses for 30 years worth of unpaid lunches. ;)

It would be funny if it wasn't so serious.

Simon SJDaccountancy
7th April 2004, 15:12
The dangerous thing is that this chaps arguements sound convincing to the unsuspecting or uninformed.

His whole argument revolves around not being caught, NOT that what the individual is actually legal from a tax point of view.

I am a member of the Chartered Institute of Taxation, so could reasonably be said to know my stuff when it comes to tax, and can absolutely confirm that these dispensations only serve to stop the reporting of certain expenses on the P11d.

In the event of a Revenue audit (during which they would see your bank statements, and be able to see these "expense" payments hitting your account), they would want evidence that these were actually incurred (receipts usually), and that they were incurred wholly, exclusively and necessarily in the course of the business.

CrapSpotter
7th April 2004, 19:35
... that it actually says that on the IR page he cited as backup up his rubbish.

What conditions must I satisfy?
Your Inspector must be sure that

no tax would be payable by your employees on expenses paid or benefits provided, and
expenses claims are independently checked and authorised within the firm and, where possible, are supported by receipts.*
.
.
.
.
.
.
*A dispensation may nevertheless be considered for controlling directors who decide their own expenses provided that there is independent documentation to vouch for the expenditure.Naturally a brolly boy is not a director and it would hardly be accepted that no receipt could be obtained for (say) an accomodation expense.

passthevas
7th April 2004, 23:53
At long last someone is listening, and I too am prepared to listen.

Its neither fraud nor a Question of not getting caught (SJD). It’s a matter of not being stuck in the last century which you 3 seem to be. In the right hand corner we have the a dozen UC’s and the IR saying per diems based on IR dispensations are neither income nor a benefit in kind and other corner you 3 from last century, saying the IR will make you pay

Then experts Crapspotter, malvo , planeit. antagoneyes and Sjd Slagging off someone else’s view that is different rather than putting up a coherent argument.

Why is it that IT contractors think they are experts it law with no training?

Lets Take on Mr Rubbish crapspotter, “The I” the company and you are 2 separate legal entities there is “no I” about it, (accounting 101) it’s the company must have a system and it must contain some Independent Verification (so where is the FKing Rubbish) Read my lips. The IR looks at the Co’s system and says hey there is not tax on the benefit issue the Dispensation. So if the IR says a no receipt system or a logbook (partial receipts) system is ok then it’s the end of the matter. The problem with you guys is that you can’t believe the IR would do that and because you can’t move beyond your closed mind, everyone else is rubbish.

Lets Deal antagoneyes, “I had An Expense audit” you did not have one, your PSC had one. Another person incapable of telling the difference between 2 legal entities.

As to this Audit, “Did the Company have a registered dispensation?” I think not (but I stand to be corrected). because you are a co director and Dispensations were not available to them. That’s why they asked for receipts (secondary evidence). My understanding is Dispensations are a new device and originally could not be used for company a director, that’s why PSC accountants like SJD never used them and why UC’s could.


Now to SJD

As a member Chartered Institute of Taxation you should know if it’s not on a P11D it’s not a benefit end of story. But you say no you could be audited and forced to hand over bank statements and they will see these Per Diems. You then say they will want evidence, well the evidence is with the employer isn’t it? how else would have you claimed them in the first place. And we are back to square one. They have to go back the company and either determine the process didn’t match the dispensation, or rescind the dispensation. You seem to suggest they can deem the per diam a benefit, ignoring the dispensation.

It’s a fairly straight forward question you should ask of your local office SJD “if someone is paid a Per Diem in accord with an IR Dispensation are they liable for tax. (The IR web site says no)

I’m not arguing the case from fraudulently obtained Dispensations.

passthevas
8th April 2004, 07:27
what does one do with the flat rate vat "profit" (2.25%)?

1) declare it as income
2) ignore it

Debbie Reinvented
8th April 2004, 07:38
passthevas - you are wrong. Simon is correct.

The dispensation simply means that the Employer does not have to include the expenses paid on the P11D. The expenses paid out are intended to cover expenses genuinely incurred for business reasons.

If the individual is investigated by IR for any reason and is found to have received expenses that he cannot substantiate as having incurred for business reasons the individual will be liable to additional tax on the surplus.

Debbie Reinvented
8th April 2004, 07:40
VAT flat rate profit is additional profit for the business and has to be declared as such

passthevas
8th April 2004, 09:00
Simon was right last century but wrong this century, show me a real live example "dispensation plus investigation"
you guys seem to think the P11d has no legal standing.

The dispensation is the "agreed" method to substantiate there was not tax benefit.

So the IR and all those umbrella companies wrong (except for OG would is run by "receipt" obsessed bookkeeppers)

Debbie Reinvented
8th April 2004, 09:03
suggest you call your local Inland Revenue office and ask them

malvolio
8th April 2004, 10:03
Hey Simon - you're evidently in the wrong job! You'd better close down SJD immediately.

Damn - I'll have to find another accountant now...

Simon SJDaccountancy
8th April 2004, 12:01
Ah well - I was good while I lasted.

Time to move over for the new breed I suppose. Happens to us all.;)

You don't think that passthevas could be from a certain umbrella Co who give rather large, unreceipted dispensation "allowances" do you?

Contractorumbrella
8th April 2004, 14:35
"you guys seem to think the P11d has no legal standing"

Simon is quite correct in what he says. The IR can and will investigate induviduals who are claiming as expenses costs that they have not incurred. The fact that an expense does not have to be reported on a P11d does not mean that it does not have to be receipted and genuine.

CrapSpotter
8th April 2004, 15:08
... a large pot. You are going to need it.

I am well aware of the difference between a company and an individual - the only similarity is that both can be fcuked over big time by the IR.

Let's just pull anothe extract from your favourite web page Mr. GreasyAss ...


What kinds of expenses payments and benefits in kind can be covered?
Any type of expenses payments (apart from round sum allowances) and most benefits in kind. Examples includeSo what exactly are daily expenses if not round sum allowances?

If an umbrella claims to have a dispensation to pay out unreceipted daily expenses ask to see it. If it doesn't specifically state that £x per day can be paid without receipts then the UC is operating outside their IR agreement. Which brings us back to the similarity and the vas...

passthevas
9th April 2004, 08:01
I have no vested interest, I just don’t like constipated thinkers, just like I don’t like tax clerks who leave the IR and pass themselves as TAX Experts of the status of a QC’s or a senior partners in the big 4 or city law firm.

Lets look at Simon expert opinion what was his position on EBT’s? Their illegal. WONG (Gov changed the law 11/02, to make them tax ineffective). Not to mention IR35.

Now there is his Umbrella offering with “generous “ expenses allowances, did he say “generous” what the f… is generous about it? Its basic expenses based on receipted bookkeeping. Is he suggesting that if I have a receipt for £200 The IR will only “Normally” allow me to claim £20. He is like the estate agent who described a terraced has as a linked detached house. Time to grass him up to trading standards.

The Civil Service use per diems, most blue chips use per diems and none of their staff are being charge additional tax (because they don’t have a receipt for every penny of the per diem). Yeah they must be wrong and bookkeeper simon is right.

Instead of making spurious claims about “knocks on the door” to scare people away from your competitors, get an IR determination and publish it!!!!!

As to the others you should contact your tory MP with the biggest story since the fast tracking immigrants. “Local IR offices are entraping taxpayers with bogus depensations"

Debbie Reinvented
9th April 2004, 09:51
Yeah they must be wrong and bookkeeper simon is right.

Wow Simon, he really has got it in for you hasn't he.

For passthevas's information, my personal tax return was subject to an enquiry about three years ago - and the IR went through my expenses claims (which were very high due to the fact that I was weekly commuting to Brussels at the time). The IR wanted to see receipts to substantiate every single item on my expense claims (and the company concerned was paying per diems with a dispensation at the time)! Being anally retentive I keep receipts for everything so no problem in the end.

ITA also had a couple of similar cases where directors expenses were queried and in one case in particular again every receipt was examined. Again no problem, because the receipts were there.

But be warned the IR can and will ask for receipts.

Simon SJDaccountancy
9th April 2004, 10:59
He does seem rather het up for someone who "has no vested interest!"

I never actually said that EBT's were illegal. I do seem to remember spending many a post warning people about the Dignatio scheme (which of course collapsed leaving about 200 contractors worse off).

Still, what do I know?

Bradley
9th April 2004, 11:29
I have no vested interest, I just don’t like constipated thinkers, just like I don’t like tax clerks who leave the IR and pass themselves as TAX Experts of the status of a QC’s or a senior partners in the big 4 or city law firm.
ptv - I think you'll find that many QCs, big 4 partners and city lawyers don't have the expertise of say Simon or anyone else who specialises in the tax affairs of contractors. that's because they don't have the xperience on the ground of speaking to the Revnue and contractors as to what actually happens in practice.

ASB
9th April 2004, 12:41
At the risk of pouring petrol on the flames isn't it the case that the actuality tends to be somewhere in the middle?

Ultimately the IR can require proof of the expenditure, it doesn't have to mean receipts but it does need to satisfy the inspector.

Years ago I used to communte to France, company invoiced clients for the agreed fee and also a flat rate for expenses (which was at the time approx 400 gbp pw). My company simply paid me the expenses.

In the ensuing PAYE audit the inspector was reasonably content with the box of ariline tickets (all at differing price) meal receipts, taxis etc. The total value of the receipts was approx 10k against a 20k claim. We evenutally agreed he would assess me as 500 gbp BIK.

A subsequent enquiry into my tax return a couple of years ago and they were rather less happy with a total of about 5k of flat rate ex's when I was away from the main office. Ultimately he was happy when viewing credit card statements showing meals etc in the region where I was and tying up with the dates. My claims were for 30gbp per day when away overnight - normally staying with mates for the price of a curry etc. Again I was asessed for a bit of BIK.

I guess if you can paint a picture to the inspector evidencing a reasonable part of the expenditure then it will be resolved. If you can't he's simply going to charge you BIK on the lot less any receipts.

Simon

passthevas
10th April 2004, 12:27
some how I knew you raise dignatio, to confused the punters. Dignatio was not the legality of EBTs for tax planning. was it !!!!!

It is about the other class of P1cks "the former IT contractor who know more than the former Tax inspecters". and then did every thing 1/2 cocked thinking he can run it with a bit of excel. and then money comes flowing in at a rate he can't handle resulting in some £2M sitting in the wrong bank accountant at the wrong time

passthevas
10th April 2004, 12:51
UC that don't disclose their fee's on their web sites and UC that claim "generous" expense allowances that turn out to be the same last century stuff.

then there is the IR35 scam, and the gross conflict of interest when all the accountants sold thier clients up the river for 12 peieces of silver (AKA £5,000 expense allowance). then started marketing UC's at 6%,5%,3%,2.5% . so b4ir25 they charged $700, now they can get £3,000 , do you think these guys are lobbing the gov't to abolish IR35. But there are guys on this thread who keep bending over for them.


I'm not all bad simons's UC seems to be the cheapest on the block. but he needs those receipts. Thats the other scam simon gets to keeps the 17.%5 VAT on your reciepts.

passthevas
10th April 2004, 13:02
I gather you are talking "pre denpensation" times.

But I do find it interesting that the IR Audit gave you sign-off a letter saying "the payments to the employee were tax deductable and not a benefit" then to have another part of the IR reverse that decision.

Are you sure ?

being happy is different from authorsing a denspenation.

also say the company had your receipts. so what reciepts were you flashing to the IR the second time round.

Simon SJDaccountancy
13th April 2004, 09:17
Did you learn to spell at the same place they taught you about tax and accountancy?

Debbie Reinvented
13th April 2004, 16:43
Nice one Simon

:rollin

WellwoodHoyle
13th April 2004, 17:45
I am almost afraid to make a comment on this topic, but here goes....

I do have an IR dispensation in front of me which I obtained for one of my PSC clients, which clearly states that receipts are required to support travel, business entertaining, sundry business items, and telephone call charges for them not to be reported on the P11ds,

But,

It does allow for the payment of fixed rate round sum subsistence allowances based upon the location and duration of the business journey.

What is important is that throughout the letter, it refers to "production of a receipt" for the other types of expenditure, but in the fixed rate round sum allowance section, there is no mention at all of receipts or other supporting documentation to prove the expenditure actually happened - merely some form of evidence that the journey took place and the time away from normal place of work.

Having looked through the dispensations received for my clients, it is clear that different tax offices provide very different wordings of their dispensation letters - perhaps that is why there is such a conflict of opinion on this topic.

I would take the view that the exact wording of the IR dispensation letter applies - which of course, is dependant upon the wording of the dispensation application letter sent to the IR in the first instance.

xoggoth
13th April 2004, 19:02
"I would take the view that the exact wording of the IR dispensation letter applies - which of course, is dependant upon the wording of the dispensation application letter sent to the IR in the first instance."

It would be good of that were true. I have a letter from the revenue, bless their incompetent little socks, telling me that due to the simple fact that my expenses were declared on the P11D there could be no liability to tax on them. The only good thing about them is that they make almost as many mistakes in one's favour as against it. One only challenges their opinions in the second case of course.

dazza12
14th April 2004, 00:07
You don't think that passthevas could be from a certain umbrella Co who give rather large, unreceipted dispensation "allowances" do you?

That wouldn't also be the same Brolly that has a habit of using an Indian call centre would it? Nice touch - especially when lots of contractors were having their jobs outsourced.

passthevas
14th April 2004, 09:13
WellwoodHoyle, don't be afraid.

Thanks for some productive input.

Simon SJDaccountancy
14th April 2004, 09:40
Wellwood,

The wordings of the dispensations do change, but the dispensation merely gets rid of the need to report the payment on the P11d.

The Revenue will always require evidence (usually receipts) that the expense was actually incurred. If no evidence can be produced then the Revenue will disallow the expense and the individual will be charged to tax on it.

freshblue
14th April 2004, 10:07
The IR should (imo) implement a flat rate expense scheme for all brolly type companies, immediately would take the cowboys/p4 (oops keyboard slipped) out of the market.

ASB
14th April 2004, 11:38
passthevas.

I was not entirely clear. The first investigation was a compliance review. Obviously on the company. Can't remember the contents of the closure letter and can't be bothered to find it since it was approx 10 years ago. Part of the settlement was that the company agreed a small proportion of the expenses paid to me were BIK and provided they were excluded from the CT calculation the inspector was happy.

The phrase "subsequent enquiry" was a poor choice of words. You seem to have inferred (reasonably) that I was referring to the same year. I wasn't. My self assessment return seems to be queried every 2 years. This is the standard minor enquiry. I send them copies of the expense claims, receipts etc via the accountant and they go away happy after he has done a little horse trading.

passthevas
15th April 2004, 08:05
Simon,

P60's and P11D's are not "mere reporting" requirements. they are "statutory declarations as to the truth of what is contained within". Criminal sanctions are attached.

for a per Diem to be taxable it has to 1) unearned income, 2) capital gain 3) earned income or 4) a BIK. there may be another class but I'can't think of them

to suggest the rule of law doesn't apply to the IR is very worrying

As an accountant I would expect you to have come across
most things. have you ever seen a P60 that overstates the income actually paid and understates taxes deduct?

Are you thinking that can't happen???

Simon SJDaccountancy
15th April 2004, 11:58
Quote:

"P60's and P11D's are not "mere reporting" requirements. they are "statutory declarations as to the truth of what is contained within". Criminal sanctions are attached. "

You are spouting rubbish. There are civil penalties, not criminal, I did not mention P60's, and the wors you put in quotes are not mine.

Quote:

"for a per Diem to be taxable it has to 1) unearned income, 2) capital gain 3) earned income or 4) a BIK. there may be another class but I'can't think of them

to suggest the rule of law doesn't apply to the IR is very worrying"

Who suggested that the rule of law does not apply to the Revenue? Also, any income arising in the course of your employment is taxable.

Quote

"have you ever seen a P60 that overstates the income actually paid and understates taxes deduct?"

Yes. Several times. Happens usually when the Reveneu issue an incorrect tax code.

You obviously have no legal or accounting knowledge, and have some sort of axe to grind, so I shan't be responding to anymore of this rubbish.

passthevas
15th April 2004, 13:09
so your saying if i have £12K deducted from my salary for tax and the P60 says I have only paid 6K, thats the result of and IR Tax code.

Or are you saying My employer only pays me 25k but puts on the P60 he has paid me 30K, is another tax code problem

I think not.


attack the person

may another accountant can help us out here

passthevas
16th April 2004, 07:35
"Also, any income arising in the course of your employment is taxable."

if its not on a P60 or P11d its not income.

I'm still waiting

passthevas
16th April 2004, 07:48
funny about those butchers up in liverpool who went to goal for a civil offence.

dazza12
16th April 2004, 12:17
funny about those butchers up in liverpool who went to goal for a civil offence.

It's 'Gaol'.

HTH.

passthevas
16th April 2004, 13:33
another one for the one with o level

Debbie Reinvented
16th April 2004, 19:52
bull sh1t

That assumes an employer never makes a mistake! And if they do that the income mistakenly not included on the P60 or the P11d is not taxable!!!

dazza12
16th April 2004, 20:31
another one for the one with o level

Is that right?

You think you know so much about me don't you. Apparently I have an O-level. You don't know what my qualifications are.

Note the 'an'. You don't say 'with o level', you say 'with an O-level'. We only let AtW off because he's Russian.

passthevas
17th April 2004, 11:54
"That assumes an employer never makes a mistake! And if they do that the income mistakenly not included on the P60 or the P11d is not taxable!!!"

Lets take the last part first
"income mistakenly not included on the P60 or the P11d is not taxable!!!"

I know there are a lot of double negatives and my grammer is crap but are you saying "income not included on a P60/P11d is not taxable" (ignore the P11dx for a minute)..... brought to you by another "real accountant"

So You have only seen it when a employer has made a mistake filling in the form? they have written 30K when he mean't 25. so its not a tax code issue like sjd cliams ?

its like pulling teeth...This issue is "not the mistake" but the "consequences of the P60," will the IR let me put 25K on my return and will they say that the amount on the p60 is what I recieved and that the end of the matter.

hopefully we get on the the understated tax payment by the end of next week.

Debbie Reinvented
17th April 2004, 15:55
"That assumes an employer never makes a mistake! And if they do that the income mistakenly not included on the P60 or the P11d is not taxable!!!"

Maybe we are speaking a different language. Your original statement seemed to imply that only income declared on the P60 and/or P11D was taxable and you seemed to be stating that if income received had not been declared on the P60 and/or P11D then it would never be taxable. If I misunderstood your orignal statement then so be it.

If I didn't then, I was merely trying to point out that this was not necessarily true. If an employer made an additional payment to you, a bonus for example, and forgot to include it on the P60 - this would NOT mean that the bonus income was automatically not taxable. This is only one example. There are other reasons why P60 or P11D could be incorrect (e.g. Simon's example of using the incorrect tax code).

passthevas
17th April 2004, 16:26
" you seemed to be stating that if income received had not been declared on the P60 and/or P11D then it would never be taxable." about 2 pages back I was talking about per diems, and the legal status of P60/P11ds never "income" . I will get back to that.

Your talking about "Understating income" on a P60. I never never said that.

so please read the question. and think outside the box


so let try again employer pays you £25K(gross). got that bit!
on P60 he writes £30K. Which means he has "Overstated your income" have we got that!

On the tax side he has deducted 12k from your salary and again on the P60 he says he has only collected 9k.


this has nothing to do with tax codes!

Fcukwit
17th April 2004, 17:05
Have to say I agree with PTV on the VAT scenario.

When I was a permi I used to claim expenses for various things and my employer was entitled to claim the VAT back on my expenses. It therefore makes sense that Umbrella Companies as the employer of the contractor are entitled to do the same thing.

Question for Simon from SJD

Are you saying that your umbrella company does not claim any VAT back from any of the expenses incurred by its contractors?
Just to make that question totally clear. Can you confirm whether or not your umbrella company benefits in any way from VAT reclaimed from expenses incurred by your umbrella company client employees?

I'm not saying there is anything wrong with this but it we would all benefit from some honesty and clarity here.

The P60 is another matter. I use an accountant and the P60 I receive each year reflects my salary for the year. I would be asking some serious questions if this were not the case.

Vetran
17th April 2004, 17:41
Of course the umbrella company claims the vat back if you are an employee of theirs, they charge vat to the client, the expenses are part of their operating costs and so can be claimed back. They aren't getting anything for free.

Umbrella invoices Client for £1000+ vat = £1175
£175 due to C&E

Contractor expenses cost £100 + vat = £117.50
£17.50 vat reclaimed from C&E

£157.50 still due to C&E on Vat 100.

£900 left in the pot.

So where does the umbrella company make a profit?

If they go on flat rate vat, then there may be a possible profit to be had.

Or if the umbrella is actually providing a managed company of which you are a director then they will make your managed company claim the vat back on your behalf, they can't claim it back because the expense was never theirs, the money never actually passes through the umbrella. The calculation above holds true again.

Fcukwit
17th April 2004, 17:57
Thanks for that Vetran - two things I didn't know about you : -

1) You are Simon from SJD
2) You know what you are talking about re accountancy.

I know 1) is incorrect and the verdict on 2) is dubious.

My company offsets VAT on purchases against VAT on sales and there is a material benefit. Flat rate VAT negates that offset benefit completely. I think you may have missed the point.

Please let Simon answer the original question - there are too many know it alls around here!!

passthevas
17th April 2004, 19:36
@#%$

horray some-one who understands the mechanics of VAT.

simon admits he lets the gov't keep the VAT in on the other thread. in the general section PTV has it in for SJD

vetaren isn't simon and he doesn't understand how Vat works or he gets his expenses paid by the end client.


It a bit hard to follow as the CUK mafia have been attacking me on 2 fronts.

Simon SJDaccountancy
18th April 2004, 10:29
Quote:

"Can you confirm whether or not your umbrella company benefits in any way from VAT reclaimed from expenses incurred by your umbrella company client employees"

OK, last comment on this - I have already answered this in a previous question.

No, we don't benefit in any way from the VAT on expenses incurred by our contractors.

xoggoth
18th April 2004, 16:16
You answered his question twice when he has been thoroughly nasty about you. I think it's only fair you give me a straight answer too. Do you have a wig, or is it just a toupee?

cukmafia
18th April 2004, 20:43
Due to the amount abuse thrown at PTV by simon & the gang it has distracted from the core issue

are "per-Diem's" subject to tax, the IR say "no"

SJD & Debbie lane say "yes", but don't describe how one discloses this to the IR.

They talk about getting "caught" in an IR inquiry.

One could run the same argument about the mileage rate. This is because the mileage rate assumes a car with a depreciable value of 5-6k, so if you run around in £300 car, you have derived and benefit because you have not incurred the depreciation expense. therefore it taxable.


but we no thats no true.:rolleyes

xoggoth
19th April 2004, 12:52
Just as well on that last one. My van is worth about ten quid.

Vetran
19th April 2004, 18:44
My company offsets VAT on purchases against VAT on sales and there is a material benefit. Flat rate VAT negates that offset benefit completely. I think you may have missed the point.


If the purchases are less than the percentage of vat, which under an umbrella managed company they are likely to be(you aren't going to buy PC's for a company you don't own), then the UC could end up in profit with flat rate vat.