# Contractor and travel expenses



## GreenMan (21 Feb 2014)

Trying to figure out if I'm entitled to claim travel/accommodation expenses.

I have my own company and am the only employee.  I provide specialist IT services to a pharmaceutical company that is based 200 miles from my home.  This is on rolling contract basis.  Right now I'm on a 9 mth contract and this will likely get extended.

My typical week is to work from my *home office* 3 days and travel to site with an overnight stay for the other 2 days.

Can I claim that my home office is my *actual place of work*? and on that basis claim the civil service mileage and subsistence the expense of have to travel to site?


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## Paddy199 (21 Feb 2014)

No. The pharmaceutical company office will be deemed your place of work when you work there and your home office when you work there. 

Have you seen the Revenue correspondence on this?


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## Gerry Canning (21 Feb 2014)

greenman; 

Suggest call into your local tax office and ask.
Always found them helpful.


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## Purple (21 Feb 2014)

Paddy199 said:


> No. The pharmaceutical company office will be deemed your place of work when you work there and your home office when you work there.


I'm not sure about that. Your home office is your place of work. Being on-site with a customer is a different thing.


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## Sol28 (21 Feb 2014)

Revenue have provided guidance on this - See Example 5 - it is relevant i think.
[broken link removed]


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## GreenMan (21 Feb 2014)

Thanks Sol28...  It seems a clear NO from that guidance.

Ok is there any reason why I can't go down the company car route?

Off course I'm going to have to pay BIK.

If this is an option...  Is it OK for the company to pay for all fuel, tax, insurance, tolls and car maintenance?  and can I claim back any incurred VAT?


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## mandelbrot (21 Feb 2014)

GreenMan said:


> Thanks Sol28...  It seems a clear NO from that guidance.
> 
> Ok is there any reason why I can't go down the company car route?
> 
> ...



It's certainly an option but likely to be quite a costly one - you'd be paying tax on 30% of the original cost of the car.


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## WizardDr (21 Feb 2014)

I actually think @paddy199 is closer to what the Revenue want to impose on the self employed.

It will of course be remarkable if this line of thinking is imposed on the Public Sector  who enjoy mileage and subsistence on what would be a more favourable interpretation. I am sure the PS Unions would be pleased with a narrowing interpretation of the place of work.

I will ask my TD to put down a Parliamentary Question on this and see what the reconciliation of this logic is.


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## mandelbrot (21 Feb 2014)

WizardDr said:


> I actually think @paddy199 is closer to what the Revenue want to impose on the self employed.
> 
> It will of course be remarkable if this line of thinking is imposed on the Public Sector who enjoy mileage and subsistence on what would be a more favourable interpretation. I am sure the PS Unions would be pleased with a narrowing interpretation of the place of work.
> 
> I will ask my TD to put down a Parliamentary Question on this and see what the reconciliation of this logic is.


 
There hasn't been any change in the logic here, or the case law that it's based on...


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## WizardDr (21 Feb 2014)

So I am imagining that the Revenue have NOT moved to change the guidance. Yet practitioners that I have talked to say that the defining of the place of work should of course apply equally to the PS. Given that case law supports this, you must concur surely.


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## mandelbrot (21 Feb 2014)

WizardDr said:


> So I am imagining that the Revenue have NOT moved to change the guidance.


 Sorry, I'm not sure what this sentence means?! Are you making a statement or asking me a question in reply? What Revenue has done, as is quite clear you read the linked tax briefing, is to CLARIFY the guidance in light of an observed trend from audit outcomes.



WizardDr said:


> Yet practitioners that I have talked to say that the defining of the place of work should of course apply equally to the PS. Given that case law supports this, you must concur surely.


 Actually I'm still baffled, in what way does the same definition of the place of work not apply to the PS? As a PS office holder I have to report to a particular Govt office, and when I am required to attend elsewhere _in the performance of my duties_ I am entitled to be reimbursed tax free. As is any employee in the same circumstances (or if they wish they can submit a claim under S.114 for expenses incurred in employment, in which case any reimbursement they have received must be taxed as income).


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## Padraigb (22 Feb 2014)

WizardDr is creating a view of PS conditions of employment that is quite incorrect. A public servant has an official place of work; where a public servant lives is his or her own concern except in relation to travel expenses. If a public servant is required to travel for work purposes, travel expenses are paid either from the work address or the home address, whichever is cheaper for the employer.

[I thought we had a moratorium on PS bashing here.]


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## Joe_90 (22 Feb 2014)

Any employee with a set place of employment gets mileage and subsistence be they in the PS or not.  

The issue seems to be that in cases of contractors who appear to be "employees" of the principle rather than the intermediary,


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## Purple (27 Feb 2014)

Sol28 said:


> Revenue have provided guidance on this - See Example 5 - it is relevant i think.
> [broken link removed]


Example 5 states that the contractors used to work solely at the customer location but now works from home by choice. This is not the case with the OP.


GreenMan said:


> Thanks Sol28...  It seems a clear NO from that guidance.
> 
> Ok is there any reason why I can't go down the company car route?
> 
> ...



I would avoid the company car route. I would also look for written guidance from Revenue as to whether the 200 mile round trip is allowable. If it is then the cost of your overnight stay should also be allowable.


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## T McGibney (27 Feb 2014)

Purple said:


> I would also look for written guidance from Revenue as to whether the 200 mile round trip is allowable.



Based on recent form, they will merely tell him it isn't allowable. If he wants a meaningful answer, he will need to decide for himself, in conjunction with his advisors, whether his circumstances fit the criteria and how far he is prepared to go to defend this position, if/when challenged by Revenue.


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## T McGibney (27 Feb 2014)

Here is Alan Moore's recent take on the subject: http://www.alanmoore.ie/uncategorized/is-it-time-for-a-revenue-ombudsman/

Here's my summary of a relevant news item from the Sunday Business Post last month: http://mcgibney.ie/2014/01/20/contractor-appeals-hit-revenue-tax-project/


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## WizardDr (28 Feb 2014)

@mandelbrot - what exactly did you not understand?

@padraigb

Merely saying that retrospective change by Revenue on contractors should apply to ALL. You are right that this would be a change for Public Servants. This is why the mileage rate paid to Public Sector is not challenged by Revenue as it would be inconsistent.

Your defence of public servants conditions is admirable - I am merely saying that Revenue need to be consistent - which they are not.


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## Joe_90 (1 Mar 2014)

@WizardDr.

Are you trying to suggest the employees who clearly have a fixed place of work are not entitled to mileage and subsistence when required to travel from that fixed place of work.

An employee who lives in Cork with a Dublin based job is NOT entitled to claim expenses for travel between the two cities.

An employee who lives in Cork with a Cork based job is entitled to claim expenses if required to travel to Dublin for work.  That applies to most employees in the public and private sector.

The issue with the contractors is that when they work for one Principal "employer" either directly or through an intermediary there is an issue determining where they are based.   They in some cases are "defacto" employees of the Principal.

I should add that I am of the view that a contractor who has established a base, in my example a guy living in Cork who is works for a Dublin based employer for 2 years has a dublin base.  If he started to work for a Galway co, I would say he had a dublin base and travel ect would have been claimed.

If he had to go to London, Paris, New York all allowable.

Where the contractor had multiple clients again I would look at where his base was formed.  If all his work was in Dublin but he lived in Cork then there was an issue.

I agree with you that Revenue need to be consistent but the argument has to be the same.


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## ang1170 (1 Mar 2014)

WizardDr said:


> Your defence of public servants conditions is admirable - I am merely saying that Revenue need to be consistent - which they are not.


 
 Where's the evidence for this?

 Is there any case you can point to where public servants are allowed to claim for travel to/from their principal place of work?


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## mandelbrot (2 Mar 2014)

WizardDr said:


> @mandelbrot - what exactly did you not understand?
> 
> @padraigb
> 
> ...


 
I'm confused about:
1. What you're asserting has changed, and
2. What distinction you believe there is between public servants and regular employees.

I don't seem to be alone either, based on other posters' comments.


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## WizardDr (2 Mar 2014)

@ang1170 - this isn't a court of law - so asking for 'evidence' is missing the point. Do you want copies of letters sent by Revenue - is that it? 

Revenue have been allegedly writing to self employed people who are contractors.

The understanding is that Revenue are making out that if you are operating at a cliemts premises that this is your place of work.

Therefore you cannot claim travel expenses.

End of.

Now what part of this do certain participants here not get?

The parallel is that Public Sector employees should also be treated the same as in if you are in another location then that too is your place of work.


Its confusing because Revenue are apparently interpreting matters beyond what is reasonable for the alleged excesses of a few.   Some posters here think there is no parallel at all. Employees have a base and if you move from that you get expenses. Isn't that it?

So if you are a contractor with different clients - what is the difference?

So if you are out of country for a few weeks what is deductible?

If you are not of country - what is deductible?

My understanding is Revenue have been writing to contractors about mileage deductions and more or less suggesting making a settlement before an investigation.


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## Joe_90 (2 Mar 2014)

> *Example 2*
> From time to time Emma is required to travel from her normal place of work to customers of A Ltd to assist them in implementing revised payroll packages. The expenses of travel and subsistence incurred on the return journey between her normal place of work and the customer’s premises may be reimbursed free of tax.



The argument is _ where is the contractors normal place of work?_

Travel from the normal place of work appears not to be in dispute.


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## mandelbrot (2 Mar 2014)

WizardDr said:


> @ang1170 - this isn't a court of law - so asking for 'evidence' is missing the point. Do you want copies of letters sent by Revenue - is that it?


 Defensive much? If you want to make assertions - in this case that there's a lack of consistency in Revenue's approach - and have any credibility, then you should be able to support your position.



WizardDr said:


> Revenue have been allegedly writing to self employed people who are contractors. *Why allegedly? This isn't court! *
> 
> The understanding is that Revenue are making out that if you are operating at a cliemts premises that this is your place of work.
> *"The" understanding? As in the one and only understanding? My understanding is different.*
> ...


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## ang1170 (2 Mar 2014)

WizardDr said:


> @ang1170 - this isn't a court of law - so asking for 'evidence' is missing the point. Do you want copies of letters sent by Revenue - is that it?


 
 Eh? No, just a simple example of something to back your assertion that Revenue treat public servants differently would do.

 There's no lack of consistency: anyone can claim expenses when away from their principal place of work.


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## RainyDay (3 Mar 2014)

WizardDr said:


> The parallel is that Public Sector employees should also be treated the same as in if you are in another location then that too is your place of work.



Public sector employees have always been treated in this way, as have the vast majority of private sector employees. It's just a few contractors who have been gaming the system, and who are squealing loudly at being clamped down on.


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## Purple (6 Mar 2014)

RainyDay said:


> Public sector employees have always been treated in this way, as have the vast majority of private sector employees. It's just a few contractors who have been gaming the system, and who are squealing loudly at being clamped down on.



True, but that doesn't mean that legitimate expenses shouldn't be allowable.


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## mandelbrot (6 Mar 2014)

If the legislation were applied by Revenue according to the letter of the law, what would happen here is that every time an employee had to incur out of pocket expenses for T&S, the employer would be obliged to deduct tax upon the reimbursement.

The employee would then have to wait until after the year end to file a return and make a claim under S.114 for relief for expenses incurred wholly, exclusively *and necessarily* *in the performance of the duties* of the employment.

So, if as a higher rate taxpayer you have to pay €500 for accommodation and travel for a week up the country on your employer's business, they would have to tax you €250+ on the €500 when they reimburse you, and then you claim a deduction for the full €500 after year-end in order to get the €250+ in tax back.

The practice as it currently exists, does so to avoid this unpleasant cash flow consequence for employees. *Maybe we should make everything taxable and let people claim based on actual expenses that they can vouch..?*

The bit in bold is the relevant part - when my employer, public or private sector, sends me away to another location to work for a few nights, the cost is accepted (based on case law) as one that is incurred in the performance of the duties of the employment.

Any of the contractors whose companies have had the tax free reimbursement disallowed by Revenue, and as a result had their taxable salary increased, still have the right to make a claim under S.114 for income tax relief based on the expenses actually incurred by them in employment, however they would be unlikely to qualify, again because of the part in bold.

That is the reality, and it has nothing to do with public or private sector.

I wonder if the Wizard will reappear to continue the argument or accept he erred in distinguishing between public / private sector employees...


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## Padraigb (6 Mar 2014)

The practice applied to expenses is that any reimbursement of actual expenses incurred by an employee is disregarded for tax purposes. This includes motor travel paid at PS rates, because those rates are based on a formula that reflects the overall cost of running a car rather than simply the cost of fuel.

Flat-rate (say €100 pw to have and use a car for work purposes) or informally reckoned rates ("here's €200 to cover your trip to Galway") should be taxed, and the taxpayer should then make a claim for relief.


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## mandelbrot (6 Mar 2014)

Padraigb said:


> The practice applied to expenses is that any reimbursement of actual expenses incurred by an employee is disregarded for tax purposes. This includes motor travel paid at PS rates, because those rates are based on a formula that reflects the overall cost of running a car rather than simply the cost of fuel.
> 
> Flat-rate (say €100 pw to have and use a car for work purposes) or informally reckoned rates ("here's €200 to cover your trip to Galway") should be taxed, and the taxpayer should then make a claim for relief.


 
Agreed, maybe I wasn't clear in what I was getting at with my previous post:

The current practice of disregarding amounts up to the civil service rates is simply that, a practice adopted by Revenue, to make life easier for everyone, and avoid a cash flow deficit for PAYE employees in between paying out-of-pocket expenses and getting 50% of it back.

In light of the apparent abuses of this practice (and I don't mean just by contractors, although they're the high profile block of what is probably a widely prevalent issue), I'm wondering if in this modern era of online filing should everything be taxed at source and individuals then make a claim after year-end based on what they can vouch..? 

That way Revenue have all the tax upfront and it's up to the taxpayer to reclaim it... the Wizard likes the notion of everyone having to file a tax return so I'm sure it'll appeal to him


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## ken v (7 Apr 2014)

Hi Gurus,

Looks like this contractor issue would apply to me, I explain:

I started my limited company in 2012 and I had a single client in 2012 but lots of projects and prospects. I traveled to meet them, mostly during weekends and clock circa 1k in mileage during the whole year. 

The turnover was 7k for that year. (Small potatoes I know...). 

At the end of 2012 I had in the company bank account 7k. To set the company up I had spent 4k (accountant, company set up, costs, etc) and 
I didn't take a salary out or recover any of costs of the company which I paid from my own pocket.

It was my first year I decided to wait to see if I needed the money for better opportunities and perhaps recover my costs later.

When I did my accounts 6 months ago I asked my accountant if these mileage (1k) could be put through and he told me that was OK since I worked from home. 
(I am a software developer and work overnight and weekends from home as I also have a day job.)

However, reading the Revenue letter and your helpful posts looks like this mileage will be specifically disallowed and my accountant was in the wrong.

How do I go about fixing this?

I feel that I was honest but perhaps I have been ill advised and that I did not stand a chance to get this right..  it was my first year ... didn't gain anything and now this... 

Regards,
Ken V.


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## T McGibney (7 Apr 2014)

ken v said:


> Hi Gurus,
> 
> Looks like this contractor issue would apply to me, I explain:
> 
> ...



I know nothing of your situation, but on the basis of the information you have given above, I wouldn't for a second accept that your mileage & associated costs are specifically disallowed, or indeed otherwise disallowable. 

If this is bothering you, first talk to your accountant.


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## ken v (7 Apr 2014)

Thanks for your answer T_McGibney,

I spoke with my accountant today.

On the issue of the home office vs normal place of work he said that it is open for interpretation in my specific case and he recommends to do nothing as the claim is small.

But I rather err on the side of caution and amend anything before it becomes an issue.
I think I want a second opinion. 

In any case, if it was to be amended, how do I go about fixing this?

Thanks,
Ken


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## T McGibney (7 Apr 2014)

ken v said:


> Thanks for your answer T_McGibney,
> 
> I spoke with my accountant today.
> 
> ...



If you want to pay Revenue money you almost certainly don't owe, don't let me stop you, it's a free country and it's your money. It's very easy, just write to Revenue, preferably via your accountant, and tell them you wish to withdraw your claim. Do get robust advice beforehand though - there are consequences attaching to labelling yourself as a defaulter.


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## ken v (7 Apr 2014)

Hi T_McGibney,

Thanks again. 

I was thinking that amending a genuine small mistake wouldn't have serious consequences since I am being pro-active, honest and forward. The company accounts were filed less than 6 months ago. 

From your answer I gather that there could be serious issues arising from this, if amend it.
And if I move past it, and turns out to be disallowed the issue will have grown bigger.

Is there really nothing I can do?

Regards,
Ken.


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## T McGibney (7 Apr 2014)

I honestly think you are worrying about something which isn't a problem. Sometimes in life and in business, you just have to stand up for yourself, because if you don't, no-one else will.  I don't really know what else to say to you.


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## ken v (7 Apr 2014)

Hi T_McGibney,

Thanks, I think I get it.

Rgds,
Ken


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## Purple (8 Apr 2014)

T McGibney said:


> I honestly think you are worrying about something which isn't a problem. Sometimes in life and in business, you just have to stand up for yourself, because if you don't, no-one else will.  I don't really know what else to say to you.



Big +1 to that.


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## Scouser (10 Apr 2014)

Is it Ok for the contractors LTD company to pay actual expenses, eg. Pay for hotels, trains, etc?  Let's say contractor lives in Galway and spends 2 nights a week in Dublin working for company A and works from home the rest.  Obviously mileage in this case can't be claimed, but can the actual hotels be paid from the contractors company account with no reimbursement back to contractor?


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## ang1170 (10 Apr 2014)

xabi said:


> Obviously mileage in this case can't be claimed


 
 I think you've answered your own question. Either the person is working away from their principle place of work, in which case both travel and subsistence could be claimed, or they're not, in which case neither could.

 Or am I missing something?


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## Scouser (10 Apr 2014)

I'm not talking about claiming anything back from the company, I want to know if I can pay for the hotel directly from the Ltd company bank account.


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## mandelbrot (11 Apr 2014)

xabi said:


> I'm not talking about claiming anything back from the company, I want to know if I can pay for the hotel directly from the Ltd company bank account.



Without any hint of irony, the answer to that is "it depends".

In the first instance on where the normal place of work is.

But essentially the test is whether the expense is wholly and exclusively laid out for the purpose of the trade, or is a benefit/perquisite for the director.


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## ang1170 (11 Apr 2014)

As the OP said, that's not the question - my misunderstanding.

The answer to the question asked is "yes". The follow-up depends if it is a claimable expense or not. If it is, there's no further action, other than to record it. If it isn't, you've two choices: (1) reimburse the company account from your own (the simplest) or (2) include the payment as part of your taxable income.


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## Scouser (11 Apr 2014)

Thanks, so what is being said is that the same rules apply for claiming tax free reimbursements.  What if the client reimburses the contractor for the hotels, in that case I assume it's ok to pay for hotel from company account, client then reimburses contractor for actual expense, no further action required..


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## T McGibney (11 Apr 2014)

xabi said:


> Thanks, so what is being said is that the same rules apply for claiming tax free reimbursements.  What if the client reimburses the contractor for the hotels, in that case I assume it's ok to pay for hotel from company account, client then reimburses contractor for actual expense, no further action required..



Don't assume anything as Revenue have quite suddenly & sharply revised their own interpretation of what is & isn't allowable - without any change in legislation, mind you - and its all now so complicated that its impossible to answer meaningfully without knowing the full specifics of your contract and circumstances.


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## Scouser (11 Apr 2014)

T McGibney said:


> Don't assume anything as Revenue have quite suddenly & sharply revised their own interpretation of what is & isn't allowable - without any change in legislation, mind you - and its all now so complicated that its impossible to answer meaningfully without knowing the full specifics of your contract and circumstances.



I have been reading up on all this and it does sound quite complicated.  The contract im talking about here enabled me to work from home and visit head office ocassionally, they allowed me to expense hotels for my visits to head office so I paid for these on the company credit card and then got reimbursed by the client, i didnt claim mileage or subsistence for these trips as i know head office was my normal place of work.


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## T McGibney (11 Apr 2014)

xabi said:


> I have been reading up on all this and it does sound quite complicated.  The contract im talking about here enabled me to work from home and visit head office ocassionally, they allowed me to expense hotels for my visits to head office so I paid for these on the company credit card and then got reimbursed by the client, i didnt claim mileage or subsistence for these trips as i know head office was my normal place of work.



If your hotel bills are being expensed, you can't also claim subsistence in respect  of overnights. You will need first to determine where is your 'normal place of work' (based on the above I wouldn't necessarily take it for granted that its your customer's head office, btw) and on that basis you need to determine your company expense entitlements.


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## Scouser (11 Apr 2014)

T McGibney said:


> If your hotel bills are being expensed, you can't also claim subsistence in respect  of overnights. You will need first to determine where is your 'normal place of work' (based on the above I wouldn't necessarily take it for granted that its your customer's head office, btw) and on that basis you need to determine your company expense entitlements.



I didn't claim any subsistence on these trips, just paid the Bill from company account and client reimbursed my ltd.  Regarding the normal place of work, I think tax briefing 3 makes it clear that my home cant be my normal place of work in this case.


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## T McGibney (11 Apr 2014)

xabi said:


> I didn't claim any subsistence on these trips, just paid the Bill from company account and client reimbursed my ltd.  Regarding the normal place of work, I think tax briefing 3 makes it clear that my home cant be my normal place of work in this case.



Sorry, I know you didn't make subsistence claims, I meant to add that you may well be entitled to claim mileage, although that is up to you. I wouldn't necessarily be taking Tax Briefing 3 as Gospel, as it's not legislation, merely an interpretation of the legislation that may or may not hold up if/when it is eventually challenged at the Appeal Commissioners and/or in the Courts. If the sums involved are significant to you, you should consider obtaining specialist professional advice.


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