Mileage and subsistence on a long term contract

[KalEl]

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.

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.

 

[capall]

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

 

[tadpole]

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.

 

[Moggy]

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.

 

[pbyrne]

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.

 

[Moggy]

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.

 

[States]

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

 

[tadpole]

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?

 

[States]

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.

 

[tadpole]

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

 

[ButtermilkJa]

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.

 

[tadpole]

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.

Perhaps I might post my own query on this.

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

 

[ButtermilkJa]

...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!

 

[Moggy]

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.