# Mileage and subsistence on a long term contract



## tadpole (22 Mar 2007)

I am an IT contractor working through my own limited company. The company is registered in Cork, where I am renting a house. I have got an 18 months contract in Dublin. I come to the capital on Monday mornings and go back to Cork on Friday evenings to spend the weekend at home.

The question I have is whether I can claim mileage/travel expenses for the Monday trips to and Friday trips from Dublin + pay myself a per-diem for Mon-Fri based on the civil service subsistence rates as outlined in IT54?

Thank you.


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## HighFlier (22 Mar 2007)

I think there is a time limit someone recently told me 6 months.


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## tadpole (22 Mar 2007)

HighFlier said:


> I think there is a time limit someone recently told me 6 months.


Where did you hear about this limit? It would be great to see a revenue leaflet with the guidelines.


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## Graham_07 (22 Mar 2007)

Revenue issue the following leaflets :-

Motoring expenses
[broken link removed]
Subsistence expenses
[broken link removed]

Hope these are of help


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## tadpole (22 Mar 2007)

Graham_07 said:


> Revenue issue the following leaflets :-
> 
> Motoring expenses
> [broken link removed]
> ...


Thank you for the links, Graham. I have seen these leaflets already and they do not really answer my questions. These guidelines mostly deal with reimbursement of the expenses incurred by an employee on an occasional travel on business. My case is different, so I am hoping to get an advise from someone who has similar experience, or/and understands the legislation well.

Thanks anyway, I appreciate any comments and suggestions!


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## BOC_ARDEE (15 Jun 2007)

Hi there, 

IT Contractor also. I was claiming mileage to and from work. Was great as it was working out about 5k a year in expenses!!. But then I had to pay it all back as I found out I was in the wrong!!. 

In a nutshell......

You can't claim mileage to and from your "normal" place of work. So if you work in the same building everyday for 18 months this is your normal place of work. If you are required to travel to a customer site from your office, this can be deemed as a business expense. 

You can rack up a few Bull-s miles in your expenses form, but dont go crazy with it or theres a chance you could get audited. Just say you had to deliver a server or do a callout here and there. And remember that revenue keep the records for 7 years so they can back date it if your caught...

I also head from my accountant that revenue are paying particular attention to IT contractors lately due to the large amount or expenses being claimed..
Think some lads are buy 42" LCD's and putting them down as "office equipment" deadly.....

Hope this helps.


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## capall (15 Jun 2007)

If you have a company and it is registered in cork where you live then that is your normal place of work ,regardless of whether you ever work at that location

The only think with long term travelling is that while you can always claims actual expenses incurred ,hotels etc the standard civil service rates are only supposed to apply for a certain period,6 months
Unless you have breaks from that location ,after which you can resume claiming the full rates


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## RainyDay (16 Jun 2007)

capall said:


> If you have a company and it is registered in cork where you live then that is your normal place of work ,regardless of whether you ever work at that location


What's your source for this, capall? The [broken link removed] refers to 'place of work', not 'place of registration of company'.


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## tadpole (18 Jun 2007)

BOC_ARDEE said:


> IT Contractor also. I was claiming mileage to and from work. Was great as it was working out about 5k a year in expenses!!. But then I had to pay it all back as I found out I was in the wrong!!


Hi BOC_ARDEE,

Thanks for sharing your experience with us! Could you outline it in a bit more detail please? Were you claiming mileage to and from work on daily basis or were you travelling to the place where you were contracting weekly as I am doing? When did you have to pay it all back? Were you actually audited? Did Revenue provided you with a document explaining why you could not claim the mileage?


I actually spoke with Revenue a couple of months ago, explained my situation in detail and asked whether I could claim the mileage from Cork to Dublin and back on weekly basis + pay myself per-diem within the civil service rates as outline in IT51. The reason why I do not consider my current client's office to be a "normal place of work" is that the nature of my IT consultancy work takes me to different places - this particular contract is in Dublin, but my next one can be in Cork or London, or South Africa, or somewhere else. I was just lucky to secure an 18 months contract this time.

The tax officer who I was talking to said that he did not see anything particularly wrong with what I was going to do and that I should not have any difficulty explaining this to a Revenue auditor if it ever comes to an audit. However he could not grant me a formal approval as they do not have guidelines on how long one could be away from his/her "base" before it is no longer considered to be a "normal place of work". I asked him to put this in writing and he sent me a letter, which vaguely said that as long as I am within the limits set out in IT51 and IT54 I should be legal.

Basically, as I understand it after talking to a number of IT contractors and a couple of accountants, this is a grey area and Revenue would not give any formal advice in such cases. So all we can do, is to stay within reason and claim actual expenses incurred solely in the course of conducting the business or pay a reasonable per-diem to cover such expenses. This does not guarantee that we won't have a problem in case of an audit, but as long as one does not over-do it (e.g. start claiming day-to-day travel to the office as mileage or put 50" TV as a business expense) he/she should be fine. The important point is to be sure that you are in the right yourself, so you can present your case if asked to.


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## capall (18 Jun 2007)

When you are contracting through  a limited company ,your registered office is your place of work. Revenue will not argue with you on this.  

There is nothing untoward about this,if you are an IT contractor without work,you will be spending weeks in your registered office trawling for work. If you were an IT contractor and your registered office is not regarded as your place of work,then it would not be financially viable for you take work that involved being away from home as you would not be allowed claim actual expenses or the civil service rates. 

Now obviously if you live in Dublin and set up a company registered in cork and work through that,then you would not expect to get expenses as if you were travelling from cork,but this would be because you are not actually incurring any expenses

IT 51 is pretty ok to interpret,IT 54 is trickier in terms of how long you can claim the full rates for and what constitutes a break from one location
But in these cases revenue are usually reasonable once you are genuinely travelling .


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## RainyDay (18 Jun 2007)

capall said:


> When you are contracting through  a limited company ,your registered office is your place of work. Revenue will not argue with you on this.


Any source for this?


capall said:


> But in these cases revenue are usually reasonable once you are genuinely travelling .


Claiming for travel to/from your daily place of work on a long term contract does not seem like genuine travel to me.


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## capall (19 Jun 2007)

_Claiming for travel to/from your daily place of work on a long term contract does not seem like genuine travel to me_

Why not ?

That is the nature of contract work,most IT contractors would love to have work in their home town or to be able to work from home but this is not always an option


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## ubiquitous (19 Jun 2007)

capall said:


> When you are contracting through  a limited company ,your registered office is your place of work.



This is totally incorrect. I run an accountancy practice and some of our technology contractor clients use our address as their registered office address. There is no way they could convince Revenue that this is their "normal place of work"


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## Graham_07 (19 Jun 2007)

*From IT54, definition of "normal place of work" (boldfacing & underlining done by me ) Note business premises, not registered office as Ubiquitous also said.*​ 
*Normal place of work*
*“Normal place of work” is the place where the employee*
*normally performs the duties of the office or employment.* In
most cases, this should not give rise to difficulty.
*The employer’s business premises will be regarded as the*
*normal place of work for the employee where:*​

*Travel is an integral part of the job involving daily*
*appointments with customers*
*or*​​
​
*The duties of the employment are performed at the*
*various premises of the employer’s customers but*
*substantive duties are also performed at the employer’s*
*business premises.*
The employee’s home would not be regarded as the normal
place of work unless there is an objective requirement that the
duties of the office or employment must be performed at
home. It is not sufficient for an employee merely to carry out
some of the duties at home.
Usually, the employer will provide the facilities necessary for
the work to be performed at the business premises. Even
where the employee has to do some work at home or to keep
some equipment at home, the place where he/she resides is a
matter of personal choice and it would not be regarded as a
place of work.
Day allowances do not apply to employees who do not have a
fixed place of work.​​


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## capall (19 Jun 2007)

I think you are missing the point here .

For an IT contractor who is a proprietary director their own limited company is their employer not whoever they are currently consulting or contracting with

Do you guys seriously make a living giving tax advice ?


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## RainyDay (19 Jun 2007)

capall said:


> _Claiming for travel to/from your daily place of work on a long term contract does not seem like genuine travel to me_
> 
> Why not ?


Well, because it is your daily place of work. The spirit of the Revenue approach is clearly to allow expenses for legitimate travel above and beyond that of a typical employee. Travel to/from your daily place of work in a long-term contract is certainly against the spirit of the regulations.


capall said:


> That is the nature of contract work,most IT contractors would love to have work in their home town or to be able to work from home but this is not always an option


Just as most employees would love to have work in their home town or work from home, but this is not always an option. Why should contractors get special treatment for their travel expenses.


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## Blinder (19 Jun 2007)

As Capal  said, as a contrator, the employer is not the client but the Limited company.
So the clients business premises would not be regarded as the normal place of work. Most  IT contractors limited company's premises would be the home of the contractor.

AS for why contractor should be allowed to claim travel expenses while the employee cannot.... well it's comparing two different siutations and is not an either or answer.


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## KalEl (19 Jun 2007)

You guys are missing the point here...because of the length of the contract, Revenue will deem the whole self-employed scenario as a sham to enable the payment of civil service mileage rates as a form of tax-free payment. The contractor is in effect a de facto employee based in one location and cannot claim travel expenses.


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## RainyDay (19 Jun 2007)

Blinder said:


> So the clients business premises would not be regarded as the normal place of work.


Do you have a source for this? When is your 'normal place of work' not the place where you normally work?


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## capall (19 Jun 2007)

This not a self employed situation

To do what you say revenue would have to use anti avoidance legislation to look through the legal company of the IT contractor and declare it a sham

This is something they have never done and are never likely to try and do as it would be quite a legal minefield
Also it is not something which is of concern to the revenue as an area of abuse.


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## KalEl (19 Jun 2007)

capall said:


> This not a self employed situation
> 
> To do what you say revenue would have to use anti avoidance legislation to look through the legal company of the IT contractor and declare it a sham
> 
> ...


 
I think the most important thing is for the OP and anyone reading this thread in the same situation to get professional advice.
My point is that Revenue are clamping down on sham scenarios created to evade paying tax and that people need to be careful as what may seem very clever and creative now could end up costing them.


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## capall (20 Jun 2007)

I don't know why posters are getting so exercised by this .
There is nothing clever or creative about this ,it is standard practise in all european countries. And totally reasonable which is why it is not something revenue are seeking to change


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## tadpole (22 Jun 2007)

KalEl said:


> I think the most important thing is for the OP and anyone reading this thread in the same situation to get professional advice.


Hi KalEl,

Thanks for your input into the thread. Let's try not to argue, but rather analyse and discuss the situation.

Could you recommend where I should seek professional advice please? I have already spoken with four accountants and they gave me different answers ranging from "There is no way you can do it" to "This is perfectly sound and legal". I even spoke with Revenue, explained my situation in detail and asked whether they were fine with what I was planning to do. They could not give me a direct answer! - see my post above.

In the IT54 quoted above the key point for me is that "Travel is an integral part of the job involving daily appointments with the customer". Travel is indeed an integral (and quite painful I must admit) part of my consulting business. The contract could be in London, for the argument sake. Would you say that my normal place of work would be there in such case?

Besides, when one contract is over, regardless of how lengthy it might be, I am likely to spend at least a few weeks looking for the next one, sitting on my business premises, which happen to be at the same address as the company is registered - my home office.

The mileage from Cork to Dublin and back + per-diem based on the civil rates just about cover the actual expenses I am incurring as a result of working away from home during the week. So I do not see how this can be seen by anyone including revenue as a sham to avoid taxes.


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## Moggy (26 Jun 2007)

I have not had any issues claiming mileage.  I work for my own limited company.  I have a room dedicated as an office at home.  Anything I buy for that room is for the office and hence an expense.  I'm also in a long term contract which means travelling away from my office, hence it is an expense. "Normal place of business" is clearly my office and I can't see how the revenue can argue otherwise, even if I am away from it for 7 hours a day.


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## pbyrne (26 Jun 2007)

Moggy said:


> I have not had any issues claiming mileage.  I work for my own limited company.  I have a room dedicated as an office at home.  Anything I buy for that room is for the office and hence an expense.  I'm also in a long term contract which means travelling away from my office, hence it is an expense. "Normal place of business" is clearly my office and I can't see how the revenue can argue otherwise, even if I am away from it for 7 hours a day.



Hi Moggy,

As I understand it you will be opening yourself up to a captial gains tax if/when you go to sell your house as a certain percentage of the house will be deemed to have been used for business purposes. The accountants hanging out here might explain this better as I have never understood how this charge would actually apply in practice - ie: would you notify revenue during the sale of the use of your house as a business (or part of the house), or is it in the declarations you sign for your solicitor. Might be worth checking out though.


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## Moggy (26 Jun 2007)

pbyrne said:


> Hi Moggy,
> 
> As I understand it you will be opening yourself up to a captial gains tax if/when you go to sell your house as a certain percentage of the house will be deemed to have been used for business purposes. The accountants hanging out here might explain this better as I have never understood how this charge would actually apply in practice - ie: would you notify revenue during the sale of the use of your house as a business (or part of the house), or is it in the declarations you sign for your solicitor. Might be worth checking out though.



It's jus a lose lose situation   CGT is not a worry for me.  This is my home, bought before I setup the company.  Yes I use it for business as far as I have a home office, I don't think this qualifies for CGT but if any accountants could clarify this it would be appreciated.

I think the situation of IT  contractors is, as mentioned before, down to whether you take the piss or not.  Modern TV's are in actual fact computer monitors and do qualify as a business expense.  The fact that you don't really need 50 inches is nobodies business but your own.  You could argue that most businesses don't even need a computer when a pen, paper and phone will do the same thing.

I think what it boils down to is this, are you paying your taxes?  Does your lifestyle match your PAYE contributions?  If you are paying yourself minimum wage and making up the rest in expenses then you are asking for trouble.  If you are claiming everything in your house as a business expense (new windows, carpets, extensions) then you are going to be stung with CGT.


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## States (1 Sep 2007)

Interesting thread!
I got audited last year and had been claiming a per diem. I had been on a contract for 18 months at that stage. After the audit Revenue told be to stop the per diem and said that the fact that I was so long on the contract , and spending 5 days a week there, I could not claim this. 

On another point, does anyone know how/if one can claim for the home office? I live in a rented house and one of the rooms is my office.

thanks


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## tadpole (1 Sep 2007)

States said:


> I got audited last year and had been claiming a per diem. I had been on a contract for 18 months at that stage. After the audit Revenue told be to stop the per diem and said that the fact that I was so long on the contract , and spending 5 days a week there, I could not claim this.


Hi States! Thanks for sharing your experience with us. 

Did the auditors told you on what grounds you could not pay yourself the per-diem?

Were you away from home during the week and coming back for the weekends only?


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## States (1 Sep 2007)

Here's the direct quoet from the letter "With regard to the daily susbsitence payment of €15 being paid to Mr X, based on the information supplied to me during the course of the audit, it is my opinion that the _(company I was working for) _site is effectively Mr X's place of employment. As such, he doesn't qulify for susbistence payment on the basis that he doesnt spend more that 5 hours per day, away from his place of employment, These payment should cease to be paid with immedaite effect"

So there are some rules around your place of work it seems.

I was not away from home & coming back at weekends.


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## tadpole (1 Sep 2007)

States said:


> it is my opinion that the _(company I was working for) _site is effectively Mr X's place of employment.


I think this is debatable. However the fact that you worked near the place where you lived (as I understand) makes it more controversial.

In any case, if I were you, I would ask them to point me towards legislation where it is clealy stated what can and cannot be done. "in my opinon" is not a good enough reason because in your opinion it could be completely legal


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## ButtermilkJa (1 Sep 2007)

tadpole said:


> I think this is debatable...


I'm not really sure it is though. This was not _State's_ opinion but that of a Revenue Auditor, so there is no comeback. As stated, the payments must stop. I'd imagine you would have a tough time trying to debate the decision with Revenue once they've decided on it. I'm sure they're basing their opinions on previous judgements.

Perhaps I might post my own query on this. I am currently a sole trader and am nearing the end of a 4 month contract with a company in Dublin city. I was contracted for 3 days a week and 99% of the time I was in the company for the full day, i.e. 5+ hours. I worked from my home office the other days of the week. I haven't claimed any kind of expense for this, other than my bus tickets in and out, or my parking tickets if I drove.

I may not be eligible for any subsistence rates as a sole trader (?) but I will be operating as a Ltd Co. from next month and my contract will be renewed with this particular company.

As an employee of my new Ltd. Co., in future would I be eligible for subsistence rates as I split my work between home and the city each week? In other words the company premises in the city can not really be classed as my 'normal place of work' as I am not there 5 days a week.

I will be bringing this up with my accountant when we meet next week but I was just reading this thread and thought I'd get an idea first.


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## tadpole (2 Sep 2007)

ButtermilkJa said:


> I'm not really sure it is though. This was not _State's_ opinion but that of a Revenue Auditor, so there is no comeback. As stated, the payments must stop. I'd imagine you would have a tough time trying to debate the decision with Revenue once they've decided on it. I'm sure they're basing their opinions on previous judgements.


I see your point and agree that debating anything with Revenue would be a hard job. However they have to base their ruling on a law and some sort of publicly available regulations. [broken link removed] is too vague in the cases we are discussing here and when I spoke with Revenue a few months ago, they could not give me a clear answer (see one of my post above). So my point being is that Revenue has to provide better justification than just someone's opinion even if he/she works as an auditor for them.

One thing State did wrong was paying per-diem for 18 months - it is only allowed to be paid for 6 months if the employee goes to the same client - it is clearly stated in IT54.



ButtermilkJa said:


> Perhaps I might post my own query on this.


Sorry, I am not familiar with the rules and regulations for the sole traders.


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## ButtermilkJa (2 Sep 2007)

tadpole said:


> ...they have to base their ruling on a law and some sort of publicly available regulations. [broken link removed] is too vague in the cases we are discussing here...


Agree 100%. I read through it again yesterday as it had been a while since I first read it but I remember being as confused then as I am now!


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## Moggy (4 Sep 2007)

States said:


> Here's the direct quoet from the letter "With regard to the daily susbsitence payment of €15 being paid to Mr X, based on the information supplied to me during the course of the audit, it is my opinion that the _(company I was working for) _site is effectively Mr X's place of employment. As such, he doesn't qulify for susbistence payment on the basis that he doesnt spend more that 5 hours per day, away from his place of employment, These payment should cease to be paid with immedaite effect"
> 
> So there are some rules around your place of work it seems.
> 
> I was not away from home & coming back at weekends.



Most self employed people will come home from their contracted work place and put in some extra hours, whether it be research, training, other nixers etc.  I have not been audited but I'm fairly confident these hours spent working from home and on weekends warrant the claim that it is my place of business.  I consider the work I do at home to be my real work, whereas my contract job is simply for money while I'm starting out on my own.


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