Contractors' Questions: Who claims expenses if the brolly delayed my start?

Contractor’s Question: I started my current IT contract on 28/04/15, but due to issue with my ID I didn’t start on my umbrella company’s books until the 02/05/15.

The upshot is that the umbrella company is saying that I will have to claim the subsistence/mileage for the 4 days (28-01) from the taxman. This doesn’t sound right; why am I paying a fee to the umbrella if (due to a delay of their making) I now have to claim the above myself from HM Revenue & Customs?

Expert’s Answer: Firstly, the umbrella company has a legal obligation to prove your ‘right to work’ in the UK before they can send you out on assignment.

Secondly, in order for expenses to be claimed there has to be a truly over-arching contract of employment, signed by both parties, and in place by the start date of the employment. Without these processes being completed the umbrella company would not be able to:

1. Send you out to work on temporary assignment; or

2. Allow expenses to be claimed.

Tax legislation provides that to be deductible as an expense from your earnings, the expense must be incurred wholly, exclusively and necessarily in the performance of your assignment/work. 

To be able to claim travel and/or accommodation expenses, you must have the intention to work on multiple assignments during your period of employment with the umbrella company. If you know you will only work on a single assignment during your employment, then your workplace automatically meets the definition (from HM Revenue & Customs) of a ‘permanent workplace’ (as opposed to a ‘temporary workplace’) and therefore travel and accommodation expense claims are not permitted.

In the circumstance you describe, I’m afraid that no allowance is due in respect to the expenses incurred before the commencement of your employment with that umbrella company and would have to be pursued via self-assessment.

The expert was ‘Roger the retired taxman,’ an adviser to industry trade body All Umbrella Companies Are Equal.

Thursday 14th May 2015
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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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