Allowable Directors Expenses against Tax

W

WGT

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Hi There,
I have a question relating to the mileage allowed as a Director expense on my limited company.
I am an IT contractor and have set up as a limited company, my registered office is 20 miles away from my client, so I have a 40 mile round trip per day.
Can I claim all of this as mileage expenses and offset it against tax.
I would have thought so but I have heard otherwise.

Thanks in advance,

WGT.
 
Read Revenue Leaflet IT54, which explains the ruling on this type of Claim.Technically, if you are travelling to the same Client 5 days a week for more than a few months, then the revenue would consider this to be your "Normal Place of Work" - thus disallowing the mileage expense claim.

You need to be performing substantive duties at your own Company Address for this mileage to be allowable, i.e. working from home 2 days a week doing research & development, for example, and Claim mileage (and subsistence for 3 days).

Some contractors claim the full amount, others for maybe a 3-day week, most claim something, and your case could need to be argued in an audit I would say.

Regards,

Mac.
 
Thanks for the reply MAC.

Amazing. My accountant always gave me the impression that this was an allowable director's expense. It seems odd that mileage incurred getting to and from work is not an expense, particularly in my case where I travel more than 800 miles a month and with increasing fuel price, I would have thought that this was seriously affecting my companies Gross Profit. Would I be correct in saying that this is a grey area. Judging by your response where you say that some contracts claim everything and some claim for 3 days would lead me to believe that it is.
 
Hi there,

If your registered office is a rented office based somewhere other than your home, then your accountant is correct.

If your office is based at home, and you do not perform any substantive work duties there, and you only have 1 client, then I think the revenue would interpret the Clients premises as a normal place of work, thus not allowable for expenseses.

This is only my opinion, also as an IT Contractor, but i suggest claim 3 days, with the other 2 days per week working from home.

Thanks,

Mac
 
WGT said:
my registered office is 20 miles away from my client, so I have a 40 mile round trip per day. Can I claim all of this as mileage expenses and offset it against tax.QUOTE]

If you only have one client and you work at their premises 5 days a week then you cannot claim this as an expense. Alot of IT Contractors do but if they get audited they are going to have problems.

Check out this link - it clearly spells out what your "normal place of work" is

[broken link removed]

I am very surprised your accountant is allowing you expense travel to work. He will also get into trouble for this if you get audited.
Click to expand...
 
Thanks for you reply homeowner.
I've read the IT54 leaflet from the revenue, but there seems to be shades of grey.
Previously I have worked 5 days at my clients which would obviously exclude me from expenses.
But as I am now working for my client for over 2 years, we have reached an agreement that I can work Monday's and Friday's from home.
I'm guessing that this allows me to claim the mileage for these 3 days but there doesn't seem to be a hard and fast rule.

Thanks for your advice,
 
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