Using a clients travel booking system

[theonewho]

Hi all
I am delivering a project for a client via an agency and so far I have taken any expenses on the chin. However, the need for travel and hotels is about to ramp up and so within my contract I can pass on the expenses to the client.

This is pretty much the norm in my industry where you source a supplier and they pass on expenses if they are asked to travel significant distances outside of London for example, so I am comfortable that I won't be edging into IR35 world (unless anyone thinks otherwise! Shout up...)

The bit that makes me nervous is that the client wants me to use their internal booking system for train, hotel bookings etc which makes me think that should be for permies only. The reasoning is that it is easier for the client to administer, they get preferential rates and they don't get double VAT (i.e. if I pay the cost and invoice them, they pay VAT on the booking and to the agency!!!)

Sounds like a valid argument, has anyone else had experience of this? Did you avoid using the clients system? Is it going to affect my IR35 status?

Cheers!

[northernladuk]

Are you using it to book only? You can still invoice it?

There is an argument if the client has a deal that is cheaper for them using a centralised system that it wouldn't be unfair to ask you to use it. It could be argued they use it for tracking costs as well so again reasonable that yours are tracked as well to the project.

Now if you get paid expenses from it that is going to be a big problem.

Avoid both if at all possible but if it is just booking it is likely this won't be a problem really.

[ClearSky Accounting Dan]

There is no specific HMRC guidance on this area but it is something we are seeing more frequently & I can understand why you are concerned.

There are a couple of ways you can tackle this. Ideally, you could negotiate a higher fee with your client & undertake the work on a time & materials basis whereby you would be responsible for booking all your own travel & accommodation & claim tax relief via your own company without ever re-charging anything to your client. This would demonstrate financial risk & feels like the actions of a genuine business.

If your client is adamant that you must in fact adhere to their processes in this regard then in the first instance you should get written confirmation of the explanation your client has given to you regarding why they want you to operate in this way. By documenting this you demonstrate to HMRC that you acknowledge the risk of being deemed similar to an employee if you simply accept the new process without question.

No-one was ever deemed inside IR35 by reason of expenses alone, so to counter any risk of being perceived to be following ‘permie’ regulations it is important to concentrate on the three key indicators for IR35 & ensure you can demonstrate you are not captured by IR35 in regard to those. Expenses are only a secondary factor that would be considered by HMRC where the likely IR35 status of an assignment is not clear according to Personal Service, Control & MOO.

[blacjac]

Could you not ask your client to book and pay for your expenses themselves?

[theonewho]

Hi, so here is an update on my options, all the costs on unplanned and a result of me having to go all over the UK to various client sites with no idea of where I am from one week to the next:

1. Preferable, use the clients hotel and train booking system from their intranet as they can then just pay the costs, they get the prices at a preferential rate and dont pay double VAT

2. I book hotels and tickets and then recharge the expenses to the client via invoice. I can argue that I would get things cheaper but the client incurs double VAT costs as it goes via the agency

3. Continue to take the costs on the chin

I don't think I will get away with renegotiating the rate, option 2 looks best to me

[northernladuk]

Donh't forget to get a credit card that you can get points on and try stay in the same chain of hotels. Priority Rewards has a credit card and has one of best reward/£ around I believe. Might as well get some points while you are away hey...

[Platypus]

Sounds like a valid argument, has anyone else had experience of this? Did you avoid using the clients system?

MyClient now insists that I use their system for air travel and hotels so that I get their preferred rates. I don't have a problem with it since I pay for them myself and then invoice the agency. By special dispensation, I'm allowed to book my own trains!

Is it going to affect my IR35 status?

No idea. But I wouldn't think so.