Contractor and travel expenses

@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.
 

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

Travel from the normal place of work appears not to be in dispute.
 
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?
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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:
@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?
Click to expand...

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

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.
 
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
 

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.
 
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.
 
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.
 
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.
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Big +1 to that.
 
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?
 
xabi said:
Obviously mileage in this case can't be claimed
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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?
 
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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