# Travel & Subsistence expenses - Revenue e-brief



## DB74 (26 Jul 2013)

One of the more useful e-briefs issued by Revenue today relates to the claiming of travel & subsistence expenses. It seems to have been released as a result of Revenue's current ongoing investigations into expense claims raised by directors in "one-man-band" companies where the company holds contracts with one or more customers

[broken link removed]

It clarifies a few issues and myths, not least the one where directors were claiming expenses to and from their home to customers' places of business, which is now expressly disbarred by the e-brief

A couple of things / queries on the e-briefing examples:


*Example 9* states that 





> Adam is a director of a company. Throughout the tax year 2012 the company won three contracts with three different clients to install heavy duty electrical equipment at three different premises. Adam spent 2 months, 6 months and 4 months respectively in the year 2012 at the 3 different premises installing the equipment. The expenses of travel incurred by Adam on the return journey from his home to the various premises and any expenses of living away from home may not be reimbursed free of tax.



The non-reimbursement of the living away from home expenses seems excessively harsh and I wonder is this a mis-print as I can see no reason why the expenses of living away would NOT be allowed in this instance.


*Example 5* states that 





> Deirdre is a director of a company with a contract to provide advertising services to GH Ltd. Up to December 2012, she worked at the premises of GH Ltd but GH Ltd now allows her to work from home and she attends the premises of GH Ltd every Friday to provide work updates and discuss projects. The expenses of travel and subsistence incurred on the return journey each Friday between Deirdre’s home and the premises of GH Ltd may not be reimbursed free of tax.



Is the "changes work pattern" part relevant here. Would the Friday expenses be allowed if she had always worked the 4-days-at-home-1-day-at-customer and didn't change from her original practice or is there some other reason why the Friday expenses are not to be re-imbursed free of tax


*Example 8* states that 





> Alison is a director of a company with three engineering contracts. On most days she works from home *by choice*. Once a month she takes a day out to attend the premises of the three clients to discuss issues arising on the engineering contracts. The travel and subsistence expenses incurred by Alison on the journey from her home to the first call and from the last call to her home may not be reimbursed free of tax. They are not expenses which are necessarily incurred “in the performance of the duties” of the office or employment.



Again this seems harsh. Just because Alison chooses to work from home shouldn't preclude her home as being her normal place of business


Can anyone shed any further light on these 3 examples?


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## T McGibney (26 Jul 2013)

It's a clear attack on 'home office' companies, and seems both discriminatory and unjust.  http://mcgibney.ie/2013/07/26/revenue-attack-home-office-company-expenses/


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## Gervan (26 Jul 2013)

This just makes me feel like giving up business altogether. The whole thrust from Revenue and Government seems to be anti-business and employment.


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## mandelbrot (26 Jul 2013)

Gervan said:


> This just makes me feel like giving up business altogether. The whole thrust from Revenue and Government seems to be anti-business and employment.


 
Why, the ebrief only clarifies a position that's already well established?

And the examples specifically relate to people who have incorporated in order to avoid being an employee - if they were on payroll there would be no question of T&S applying in any of the instances outlined...

And I don't see how the thrust is anti-business or anti-employment - it's anti-pseudo self-employment. This whole "payment of expenses" wouldn't be an issue if the individuals in question operated as sole traders, but they don't, and for good reason - because they would not pass an objective test of being self employed.

There are plenty of instances of people forming companies as contractors, paying themselves a salary below a minimum wage level, or no salary at all, and drawing tens of thousands of euros of tax free expenses, which for all intents and purposes a tax free wage. That's hardly right or fair to Joe Soap PAYE employee, working in the same company on a lower hourly rate, and paying taxes through the nose.


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## mandelbrot (26 Jul 2013)

DB74 said:


> *Example 9* states that
> 
> 
> > Adam is a director of a company. Throughout the tax year 2012 the company won three contracts with three different clients to install heavy duty electrical equipment at three different premises. Adam spent 2 months, 6 months and 4 months respectively in the year 2012 at the 3 different premises installing the equipment. The expenses of travel incurred by Adam on the return journey from his home to the various premises and any expenses of living away from home may not be reimbursed free of tax.
> ...


 
The fact that there are 3 different contracts during the year doesn't alter the fact that the normal place of work is not the contractor's home at any time. If the contracts overlapped then travel between the different customer sites would be allowable; and presumably if they were far enough apart and the engagement required such attendance, then overnight subsistence would be allowable.


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## mandelbrot (26 Jul 2013)

*... waits for it all to kick off....*


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## mandelbrot (26 Jul 2013)

T McGibney said:


> It's a clear attack on 'home office' companies, and seems both discriminatory and unjust. http://mcgibney.ie/2013/07/26/revenue-attack-home-office-company-expenses/


 
Who does it discriminate against?


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## T McGibney (26 Jul 2013)

mandelbrot said:


> And the examples specifically relate to people who have incorporated in order to avoid being an employee - if they were on payroll there would be no question of T&S applying in any of the instances outlined...



That's clearly not the case. The tax briefing attacks both single-client contractor and multi-client contractor companies.



mandelbrot said:


> And I don't see how the thrust is anti-business or anti-employment -  it's anti-pseudo self-employment. This whole "payment of expenses"  wouldn't be an issue if the individuals in question operated as sole  traders, but they don't, and for good reason - because they would not  pass an objective test of being self employed.



And if my aunt was male, she'd be my uncle...

There is no such thing as "pseudo self-employment".  A company has a separate legal identity to its owners or directors and Revenue can't change that.

There is nothing unethical or illegal about utilising a limited company in order to operate one's business affairs - indeed the plight of sole traders who have been held personally liable for non-tax debts and commitments of their businesses in recent years illustrates one prominent reason why so many small business owners incorporate. 

In relation to contracting companies, the ultimate irony is that companies who sub-contract work to others have generally insisted that their sub-contractors incorporate, in order to protect them against an employers PRSI grab by Revenue. So subcontracting individuals and firms have had no option but to incorporate.



mandelbrot said:


> There are plenty of instances of people forming companies as  contractors, paying themselves a salary below a minimum wage level, or  no salary at all, and drawing tens of thousands of euros of tax free  expenses, which for all intents and purposes a tax free wage. That's  hardly right or fair to Joe Soap PAYE employee, working in the same  company on a lower hourly rate, and paying taxes through the  nose.



Haven't Revenue already addressed this alleged phenomenon, first via the South-West region and then nationwide?


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## T McGibney (26 Jul 2013)

mandelbrot said:


> Who does it discriminate against?



Companies that operate via home offices.


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## Gervan (26 Jul 2013)

Mandelbrot, I cannot afford to hire an office. I work from a dedicated room in my house. *That is my office*. When I travel to a client's business I claim the travel expense *from my office.*
This is definitely an attack on the small business. If I could afford to hire an office next door to my house, the travel claim would be allowable. But I can't afford rent. 
And you ask "Who does it discriminate against?"


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## T McGibney (26 Jul 2013)

And if you do rent an office, they will (1) claim that your overheads are "unusually high" and seek to audit you on that basis (2) claim its a "pseudo office" even though you do all your administration work there, at significant cost.


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## mandelbrot (27 Jul 2013)

T McGibney said:


> That's clearly not the case. The tax briefing attacks both single-client contractor and multi-client contractor companies.


Contractors can have multiple clients, just like employees can have multiple employers. The point I was making was that in each of the examples, the relationship was one of a client company contracting in the services of a particular individual, albeit through an intermediary.

Once again it doesn't attack anything - it simply makes explicit what has always been Revenue's position.



T McGibney said:


> And if my aunt was male, she'd be my uncle...
> 
> There is no such thing as "pseudo self-employment".  A company has a separate legal identity to its owners or directors and Revenue can't change that.



I agree wholeheartedly, since if they could change it they would have, and the expenses wouldn't be an issue! 



T McGibney said:


> There is nothing unethical or illegal about utilising a limited company in order to operate one's business affairs - indeed the plight of sole traders who have been held personally liable for non-tax debts and commitments of their businesses in recent years illustrates one prominent reason why so many small business owners incorporate.



I think it's a bit disingenuous to equate an individual contractor to a small business owner. The reality is that the sole reason for the contractor trading through a company is because otherwise the provision of the individual's services would be viewed as an employment. Do you know of any contractors who bear any business/financial risks beyond those borne by salaried employees doing comparable work? Apart obviously from the risk of losing their contract (though that's a real risk for many employees these days too), since that risk exists independently of the existence of the intermediary company.

So to my mind there is a very clear distinction between a person who is in fact running a business, and a person who does the job of a contracted employee, who attends a job interview, or goes through an agency in exactly the same way as they would when going for any job, and then either uses their own Ltd co or an umbrella co, to artificially change the legal status of the relationship so that it is not legally a direct employment. Pseudo self-employment is the best name I can come up with for that situation (if we're trotting out clichés like your aunt with the ambiguous bits, then I would assert it quacks like a duck...).



T McGibney said:


> In relation to contracting companies, the ultimate irony is that companies who sub-contract work to others have generally insisted that their sub-contractors incorporate, in order to protect them against an employers PRSI grab by Revenue. So subcontracting individuals and firms have had no option but to incorporate.



You say an employers PRSI grab, but if there's a grab it's because the money is due - the pressure to incorporate is due to the reluctance of the employing company to take on the various responsibilities of employing labour in the normal / traditional way.

But I don't see how you can blame Revenue for that - if the definition of what constitutes an employment (and the rights and obligations that derive on the parties as a result) needs to be fundamentally altered to reflect the demands of both the workforce and industries, it becomes a bigger political / societal issue.



T McGibney said:


> Haven't Revenue already addressed this alleged phenomenon, first via the South-West region and then nationwide?


Well it's only in the process of being rolled out nationwide AFAIK. It seems to me that this ebrief is as a result of the outcomes being reported from the SW project, and for auditors, taxpayers and agents to refer to in the course of the cases yet to be addressed.

Maybe they're also hoping it will encourage voluntary disclosures, so as to reduce both the Revenue resource needed to address the sector and the penalty level for the taxpayers who have an issue.


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## mandelbrot (27 Jul 2013)

Gervan said:


> Mandelbrot, I cannot afford to hire an office. I work from a dedicated room in my house. *That is my office*. When I travel to a client's business I claim the travel expense *from my office.*
> This is definitely an attack on the small business. If I could afford to hire an office next door to my house, the travel claim would be allowable. But I can't afford rent.
> And you ask "Who does it discriminate against?"



Gervan, you're an accountant aren't you?

Unless you have a very unusual setup in terms of the services you provide and how you contract to provide them, then the ebrief has no relevance to you. An accountant (Ltd co) with a "normal" practice i.e. dozens up to hundreds of clients, will generally have an office, either in their home or rented, and this is where the substantial proportion of their work is performed for their clients. Presumably you also have the right to employ staff to perform some of the work for you, which would certainly not be the case with the vast vast majority of contractors.

Are you even incorporated?!

Unless you provide one of those services where you call to the client's offices and do their bookkeeping etc. onsite, then there could never be any question as to your normal place of work being other than your own office, be it at home or wherever.


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## mandelbrot (27 Jul 2013)

T McGibney said:


> And if you do rent an office, they will (1) claim that your overheads are "unusually high" and seek to audit you on that basis (2) claim its a "pseudo office" even though you do all your administration work there, at significant cost.



If I was an audit manager I'd brain anyone who would attempt to justify issuing an audit letter on the basis solely of "unusually high" overheads - I'd be amazed if that happened anymore - much more likely they'd raise an aspect query and ask to see a full set of accounts, and if still unhappy a copy of the lease. 

As for (2) have you ever actually seen that assertion made, sounds a bit weird... don't get me wrong, I'm fully aware that anything is possible - but it's hardly asserted while the auditor is actually sitting there in said "pseudo office" conducting the audit


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## T McGibney (27 Jul 2013)

> If I was an audit manager I'd brain anyone who would attempt to justify issuing an audit letter on the basis solely of "unusually high" overheads - I'd be amazed if that happened anymore - much more likely they'd raise an aspect query and ask to see a full set of accounts, and if still unhappy a copy of the lease.



The Revenue south West letter to the ITI concerned itself pretty much exclusively with contractors with unusually high overheads, and concluded that a % of same were bogus, hence all were being invited to "clarify" their position.


> As for (2) have you ever actually seen that assertion made, sounds a bit weird... don't get me wrong, I'm fully aware that anything is possible - but it's hardly asserted while the auditor is actually sitting there in said "pseudo office" conducting the audit



Given the current anti-business attitude of Revenue, where terms like "pseudo self employment" are being bandied about in an attempt to discredit home office businesses (not just those who contract into specific 'cube farm' type corporate positions), anything is possible.


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## T McGibney (27 Jul 2013)

mandelbrot said:


> Gervan, you're an accountant aren't you?
> 
> Are you even incorporated?!



What's so weird? Many accountants are incorporated nowadays. It makes perfect business sense for a new accounting firm to incorporate.

Gervan's fears arising from yesterday's Tax Briefing are well founded. Revenue's 'Alison' example cited by the OP illustrates this starkly.


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## Gervan (27 Jul 2013)

mandelbrot said:


> Gervan, you're an accountant aren't you?
> 
> Unless you have a very unusual setup in terms of the services you provide and how you contract to provide them, then the ebrief has no relevance to you. An accountant (Ltd co) with a "normal" practice i.e. dozens up to hundreds of clients,
> *not "normal" then, I have less than twenty
> ...



The way I read the scenarios, my travel from my office/home to clients place of business would be disallowed.


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## T McGibney (27 Jul 2013)

That's the problem with Revenue, they have preconceived ideas about what they term as "normal" structures and modus operandi for each business sector, and if you business falls outside their preconceived standard, they will assume you're on some sort of tax dodge.


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## Time (27 Jul 2013)

So have the registered office somewhere else?


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## mandelbrot (28 Jul 2013)

T McGibney said:


> That's the problem with Revenue, they have preconceived ideas about what they term as "normal" structures and modus operandi for each business sector, and if you business falls outside their preconceived standard, they will assume you're on some sort of tax dodge.


 
So are you saying there's no such thing as a person's normal place of work??


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## mandelbrot (28 Jul 2013)

T McGibney said:


> The Revenue south West letter to the ITI concerned itself pretty much exclusively with contractors with unusually high overheads, and concluded that a % of same were bogus, hence all were being invited to "clarify" their position.


Well lets be clear about the context here, as it's narrower than overheads generally:

You said





T McGibney said:


> And if you do rent an office, they will (1) claim that your overheads are "unusually high" and seek to audit you on that basis...


 
I replied, in the context of renting an office





mandelbrot said:


> If I was an audit manager I'd brain anyone who would attempt to justify issuing an audit letter on the basis solely of "unusually high" overheads - I'd be amazed if that happened anymore - much more likely they'd raise an aspect query and ask to see a full set of accounts, and if still unhappy a copy of the lease.


 
Maybe I should have been clearer that I meant unusually high "other expenses"; rent doesn't have its own designated space on the accounts information panels in the CT1 / Form11, so it ends up in "other expenses" - I'm talking about a situation where an audit letter would issue prior to the auditor knowing what actually comprises the "other expenses".


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## mandelbrot (28 Jul 2013)

Time said:


> So have the registered office somewhere else?


 
The location of the registered office is irrelevant - that's why I don't understand Tommy's allegations of discrimination. It doesn't matter where your office is, if it's your normal place of work.


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## mandelbrot (28 Jul 2013)

Gervan said:


> The way I read the scenarios, my travel from my office/home to clients place of business would be disallowed.


 
Travel from your normal place of work to a temporary place of work in the preformance of the duties of your office/employment can be reimbursed tax free.

Do you foresee a problem with being able to objectively demonstrate your home office is your normal place of business? Isn't it where you meet clients, prep their working papers, year-end accounts, tax work and company secretarial work?


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## T McGibney (29 Jul 2013)

mandelbrot said:


> So are you saying there's no such thing as a person's normal place of work??



That is a strawman question. My point is that concepts like "normal place of work" are becoming increasingly fuzzy as work patterns, communication media and lifestyles evolve.  In some cases, pre-existing practices and customs are being utterly turned on their head. 

For example if I need to talk to a client this morning, my default action will be to call them on their mobile as I probably won't catch them if I call their landline. 

Or to put it differently, business people no longer sit in offices waiting for the phone to ring.

This wasn't the case 10-12 years ago when many people didn't even have a mobile phone let alone an online presence. Yet Revenue's logic and terminology have not evolved accordingly and are still rooted in 1980's norms of a business person turning up at an office in the morning, taking lunch break in the middle of the day and going home once their 7.5 - 8 hours work is done.


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## mandelbrot (29 Jul 2013)

T McGibney said:


> That is a strawman question. My point is that concepts like "normal place of work" are becoming increasingly fuzzy as work patterns, communication media and lifestyles evolve. In some cases, pre-existing practices and customs are being utterly turned on their head.
> 
> For example if I need to talk to a client this morning, my default action will be to call them on their mobile as I probably won't catch them if I call their landline.
> 
> ...


 
I don't see how it's a strawman TBH. 

A business person who is out on the road in the manner you're describing won't fall foul of the clarifications in the ebriefing - unless the nature of the work they perform and the contractual arrangements with their customers is such that they spend so little time in their office (be it at home or otherwise) that it can't be objectively argued to be their normal place of work. But the concept of a travelling appointment is also catered for in SP IT/2/2007 to cover that situation.

To avoid a problem with the deductibility of what they feel are legitimately incurred expenses, a business person could always opt to trade as a sole trader, based from home, and claim deductions based on the Case I "wholly and exclusively" test. (A business person could do this, but I'm sure they wouldn't need to, whereas a contractor couldn't because they'd fall to be classified as employees of the company they contract into.)

Your use of the term business person is actually interesting, because I was talking to a friend over the weekend who has previously worked as a contractor, and they certainly don't/didn't consider themself a business person - they considered themself an employee in all but name - and they agreed that my use of the term "pseudo self-employed" to describe their situation while contracting was pretty much on the money.

You seem to be very exercised over this issue Tommy, and it's clear you're quite unhappy about existing policy/practice, but I can't get any sense of what you think _should_ be the case?



Are you saying that you genuinely don't see any problem with a situation where an employer can say to an employee:

We'd like you to go off payroll and set up a company;
You'll do the exact same job as always but we'll pay you 30% more per hour to compensate you for the risk of the contract not being renewed and your loss of entitlements as an employee;
You can set the company up as operating from your home (or wherever you fancy), and claim a tax free expense for the commute and a daily subsistence expense;
As a result your net pay will be massively higher than it is now, the total cost to us of employing you will be no higher (given the onerous obligations we're sidestepping).
That's a win-win for the parties involved, and the losers are the rest of the workforce in employment who have to pick up the tab. Do you not see it as an area of substantial tax avoidance and loss to teh exchequer that should be addressed?


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## T McGibney (29 Jul 2013)

It most certainly isn't a win-win for an employee to come off payroll  and operate via a limited company. Job security and social protection  entitlements based on employment service are invaluable assets for any  employee, and anyone who voluntarily surrenders them is either grossly  misinformed or insane. The past 5 years of recession have certainly  proved that.

The problem is that the world is changing and  particularly in recessionary times, many employers don't have enough  resources to keep certain specialist staff in long-term full-time employment, so  both employees and employers are having to rethink and redefine their  mutual engagements. This means that some employees are left with little  choice but to market themselves as contractors, where they contract  part-time to their former employer but also concurrently to other  customers.  

The scenario you paint where an ex-employee gets tax  relief on the expenses of a daily routine commute to their former place  of employment is a caricature. Any tax advisor worth their salt would  suggest to that person that they wouldn't stand a chance with get away  with claiming expenses in such a manner if/when it comes to Revenue  attention. And I wouldn't class this commuter as a "business person" either.


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## Strongback (4 Sep 2013)

I'm a small engineering consultant who has been caught up in the net of audits of 'one man bands' even though I have an employee. I have met with the Revenue and in the interview they were focused on having vouchers for all expenses.  The inspector offered 40% of what I had claimed should I not be able to produce receipts, this was a one time deal only he said and after the meeting this offer would be off the table.  I didn't take the offer.  40% is the figure they are using for the 'one man band study'.  He kept reiterating that the study has strict requirements for the need for vouchers to be produced and nothing will be accepted without receipts.

My read of the study is that they are interested in the type of people who work in pharmaceutical, high tech and the computer industries many of whom work on contract and have set up one man band limited companies.  I personally know people who work for a single multinationals as their only client. They go to the same place of work every day and work alongside full time stuff but trade as Ltd companies  They charge millage to and from where they are working every day and charge subsistence every day at the full day rate of €33.41. They then jack up their expenses where they can and include making claims for home office expenses even though they never work at home.  Many of these people have very specialized skills/experience and the industries they work in are pretty much closed shops to technical staff that don't have particular industry related experience.

In terms of my audit I am lucky my expenses are low and the Revenue even suggested I was under claiming.  This was quickly followed by 'it doesn't matter if your claims are low receipts must be produced or the expenses are not admissible'.   I have a bit of chasing up to do to get my hands on some receipts.


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## T McGibney (4 Sep 2013)

Strongback said:


> In terms of my audit I am lucky my expenses are low and the Revenue even suggested I was under claiming.  This was quickly followed by 'it doesn't matter if your claims are low receipts must be produced or the expenses are not admissible'.   I have a bit of chasing up to do to get my hands on some receipts.



Have you sought expert advice on this? If so, has your advisor concluded that the inspector is acting within their powers in retrospectively demanding receipts for expenses claimed in compliance with IT51/IT55? In such case, have they outlined the precise basis for their opinion?


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## Strongback (4 Sep 2013)

T McGibney said:


> Have you sought expert advice on this? If so, has your advisor concluded that the inspector is acting within their powers in retrospectively demanding receipts for expenses claimed in compliance with IT51/IT55? In such case, have they outlined the precise basis for their opinion?




My accountant prepared the initial submission based on the Revenue audits request for information, bank statements, invoices etc.  My accountant attended the meeting with the Revenue with me and did most of the talking. He argued the toss and did any negotiating.  Personally I have put about 100 hours of my time into preparing for the audit.  

Btw they looked for evidence I carried profession indemnity insurance (for designers) as some one man band Ltd companies don't carry it if they are working under the PI insurance of a bigger company they are contracted to.  I have PI so it was no problem for me but it could trip others up.


I am not familiar with the requirements of IT51/IT55 but I did feel my accountant was on the ball and put forward a good case for me.  In the end it is really coming down to can I provide receipts for everything. As I said I have never really bothered going down the road of maximizing expenses because if I'm truthful I was a bit naive as to my entitlements. In saying that it is a good thing in terms of how the Revenue are viewing me now, I'm small potatoes.   If my expenses had been high I feel he would have gone about picking holes in them.

On subsistence he wanted some snap shots that I was say down the country if I claimed I was such as a visa card purchase for lunch or something.  He said he wouldn't be going through every single subsistence claim individually but he wanted some general evidence I was in the different places I claimed I was.


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## T McGibney (4 Sep 2013)

Are you operating through a limited company? If so, IT51 & IT55 apply and these don't force you to have receipts for every single expense item. If you're a sole trader, you must have such receipts.


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## Strongback (4 Sep 2013)

T McGibney said:


> Are you operating through a limited company? If so, IT51 & IT55 apply and these don't force you to have receipts for every single expense item. If you're a sole trader, you must have such receipts.




I am a limited company.  The study being carried out has very particular requirements to ensure everybody in the study is assessed like for like. It appears on some particular issues it is being carried out more stringently than a typical audit.   Whereas a view can sometimes be taken on some things during audits with this study they are looking for evidence that people people are not claiming for driving to work and jacking up subsistence, expenses etc.  There appears to be very little flexibility on mileage or diesel, subsistence and receipts.  I believe the study criteria can be read on line, I have not read it myself.

My experience is much in keeping with the extracts a poster above has put up on the Revenues  examples of what is admissible for mileage and subsistence. My accountant tells me there has been recent discussions between the Revenue and bodies representing companies in relation to these issues.  

To me, and it's only my opinion, it seems they are gathering information on one man band Ltd companies that are basically contracted into large companies.  Many of these one man band Ltd. companies appear to me to be being seen as essentially no different to ordinary full time permanent staff and as such should only be making modest expenses, mileage and subsistence claims.


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## mandelbrot (5 Sep 2013)

T McGibney said:


> Are you operating through a limited company? If so, IT51 & IT55 apply and these don't force you to have receipts for every single expense item. If you're a sole trader, you must have such receipts.


 
I'm not sure if you're taking the same understanding as I am from what Strongback is describing, Tommy.

As far as I can tell, the auditor is looking at the company's payments of tax free travel & subsistence to the employee, and they are seeking verification from the employer to confirm that the employee was in fact away from their normal place of work on a sample of the dates in question. If you were performing a statutory audit of the company, is this any more than you would want to see to satisfy yourself that the claims paid were legitimate? It's very easy to have a claim logged which satisfies the information recording requirements of IT51/IT55, but the employer would need to be able to demonstrate how they satisfied themselves that the employee was in fact off-site during the periods claimed for.

For example the Revenue auditor will have claimed mileage and subsistence for the day(s) on site at the audit. They will have submitted a claim to their manager for the expenses, but if/when the C&AG's come to audit, they will look at the time clocking system to see that the employee was clocked out of the office at the time, and they might review the audit papers which should have the auditor's notes of interview etc on the date(s) in question.

The need to seek corroborative evidence like this has arisen because of auditors' experience in previous audits, whereby people have claimed T&S for driving around the countryside to clients, on dates when they were out of the country on their summer holidays with the family, or in hospital after an operation etc...

While in strictness Strongback's agent could probably tell the auditor to go whistle for receipts (since these would be the individual's rather than the company's), it is the easiest way to clarify the position, and if Strongback has them and wants to get the thing sorted then it'd be sensible to furnish them. If they don't want to play ball in that regard, then the auditor will need to see diaries, timesheets, invoices (don't engineers normally charge a per diem / mileage on the invoice for site visits?) or other correspondence with clients referencing the site visits... bottom line is they'll have to produce something to support the log.

It's also worth bearing in mind that the treatments in SP-IT/2/07, IT51 and IT55 have no legislative basis, they're entirely concessional.


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## T McGibney (5 Sep 2013)

My comments were in response to this: "it doesn't matter if your claims are low receipts must be produced or the expenses are not admissible'". IF this is an accurate summation of what the inspector said, then there is a possibility that they are exceeding their powers, a qualification which I noted while making the remarks. If the inspector is merely seeking to validate a small audit sample, then I would expect that in most cases there will be existing circumstantial evidence readily available on their files to do so. It shouldn't be unreasonable for the inspector to seek additional evidence to corroborate the broad thrust of the taxpayer's story but on the other hand the fact that this is being done on a retrospective basis may present difficulties for the taxpayer unless they have been exceptionally meticulous in keeping records and receipts for inconsequential items. This should be taken into account when adjudicating on their case.


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## mandelbrot (5 Sep 2013)

T McGibney said:


> My comments were in response to this: "it doesn't matter if your claims are low receipts must be produced or the expenses are not admissible'". IF this is an accurate summation of what the inspector said, then there is a possibility that they are exceeding their powers, a qualification which I noted while making the remarks.



I get what you're saying, that quote does appear inconsistent with a flat rate expenses claim.

Unless maybe Strongback is claiming expenses on an actual basis, which would explain both that statement and the one where he says the auditor suggested he may have been under claiming (eg. claiming a tenner for lunch rather than claiming a 10-hour day)...


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## Strongback (5 Sep 2013)

In my case one example was the discussion on motor expenses.  I do not have records for all company vehicle diesel purchases.  The officer stated that in this study receipts are required for diesel used in company vehicles.  He repeated this on three separate occasions.  Of course we argued that a vehicle with mileage clocked up did not travel around on thin air.  We will see what happens but the officer said the current study gives him very little flexibility if receipts are not produced.  

He also requested copies of utility bills, mobiles, etc and invoices for all claimed purchases.


A quick question for the more knowledgeable:  Are the one page statement of account that the utility companies issue sufficient for the Revenue or are individual bills required?

I will ask my accountant but its good to have a second opinion.


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## mandelbrot (6 Sep 2013)

So there is a company vehicle, and the expenses in question are the running costs of this vehicle which the company has paid? 

In which case what the auditor has said about the requirement for receipts is entirely correct. How were the expenses calculated if not on the basis of receipts?

Has the company accounted for a benefit-in-kind on you as director for personal use of the vehicle?


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## Joe_90 (6 Sep 2013)

@strongback you need to clarify the situation.  

I would be surprised if you went into a Revenue Audit missing the basic backup for payments and then appear to question the Auditor when they ask you to provide documentary evidence for the payments.


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## headache (6 Sep 2013)

I’m curious as to how a director can claim ‘tens of thousands of euros of tax free expenses’?  I am probably a bit naive about such things so I am curious as to how this is done.  Other than the overnight allowance at 365 days to give you €39,780 what else can you claim?  And surely if the P35 listed expenses that high for one director Revenue could hardly say ‘Oh look, he/she spends every day of the year away from their office, that’s just fine!’

  There are plenty of directors who genuinely work from home but travel to oversee projects on a weekly or monthly basis.  According to that ebrief, those persons are no longer entitled to claim mileage and some of that mileage would be quite substantial.

  In addition to that, I would be concerned that this could be extended to sole traders.  I am not incorporated but am in a similar position to Gervan.  I can sometimes be on the road 4 days in a week to clients to manage their day to day book-keeping.  Or this week, I’ve been at home 4 days.  I have reduced my client base by half in the last two years.  Mostly because I am tired and because I couldn’t stand the sight of some of them anymore!!   So I think Revenue could argue that my normal place of work is not home on certain days and curtail my motoring expenses.  To be fair, I only claim one third anyway and trust me when I tell you I seldom go anywhere other than work.

  Although I always felt these expense claims by some of these one-man companies was pushing the limit, it seems Revenue’s response is to punish every director working out of a home office and that is not fair or equitable.


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## Strongback (6 Sep 2013)

mandelbrot said:


> So there is a company vehicle, and the expenses in question are the running costs of this vehicle which the company has paid?
> 
> In which case what the auditor has said about the requirement for receipts is entirely correct. How were the expenses calculated if not on the basis of receipts?
> 
> Has the company accounted for a benefit-in-kind on you as director for personal use of the vehicle?




There is a company van and personal cars. I have a personal car I use for work and had several employees during the period being audited.


The company van expenses are based on lease hire, insurance, servicing and diesel receipts. I do not have a full record of all diesel receipts and made a claim for some I do not have.  The van covers  on average of 14000km per year, the claim is for €1750 of diesel per year which all attending the meeting felt was a modest amount.  The officers stated while the claim was low he would only consider claims with receipts.  He extended this to all expenses except subsistence and millage on private cars where he wanted evidence a person was were they said they were.  He requires invoices for all purchase invoices.

I hope this clarifies things.  

Btw my accountant is not giving up on the unreceipted claims.


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## Branz (11 Apr 2015)

This thread refers to IT51 and IT55

Should it not be IT51 and IT54
*Employees' Motoring/Bicycle Expenses - IT51*
http://www.revenue.ie/en/tax/it/leaflets/it51.html

*Employees' Subsistence Expenses - IT54*
http://www.revenue.ie/en/tax/it/leaflets/it54.html

*IT 55 - The Employment and Investment Incentive (EII) - Relief for Investment in Corporate Trades*
[broken link removed]

What brought me here was the following:

A neighbour has spent the last 3 or four years developing a professional services consultancy business through a limited [ close] company and she works from home.
She is a director of the company.
Up to now her CT1 returns have shown tax losses, she expects to start reducing these tax losses in 2015.

in her CT1 calculations thus far, for travelling around the country she has used the Civil Service mileage rates for the motor expenses charges in the accounts.
She has charged no flat rate subsistence, she has receipts for hotels etc.
Neither has she charged any wages or salary for herself

In the light of the thrust of this thread she is concerned that the motor expenses claimed thus far are wrong.

In addition she wonders what she needs to do once the company becomes profitable: does she need to become an employee of the company and the company pay employer PRSI etc and then she gets taxed through the F11
Thanks


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## Newbie-employee (11 Apr 2015)

A few issues here.  If she is drawing anything from the company to live upon, this should be classed as either a wage or salary (I don't think it can be claimed as a loan from the company, but cannot recall reason why). Is she really working for 3-4 years without any benefit ?    If classed as a wage etc, the company owes practically the same already in what should have been deducted as paye to the Revenue already.  To answer your q; she is already effectively an employee for payroll-tax purposes as a director.

There is no change when the company becomes profitable.  But it sounds like your friend needs professional advice v v quickly.


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## Branz (12 Apr 2015)

Thanks, she has other income which is 100% above board etc.
No drawings/wages/salary have been paid. The expenses incurred are things like marketing costs, advertising, receipted hotels and meals when staying away from home, conference costs and training courses she has attended as well as mileage at the Civil Service (CS) rate. The accumulated tax losses are funded by an interest free directors loan from her.

Therefore there is no questioned of deemed income, the question relates to the CS rates for mileage as someone said to her that "Revenue are clamping down on mileage...."
Which I understand is about what constitutes the normal place of work and the concept of what exactly an employee is.

Take a case from her file: prospective customer calls her and says, come down and make a presentation to our board on your idea.
She drives 300 miles round trip and she has expensed that in the accounts at CS rates


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