Travel & Subsistence expenses - Revenue e-brief

DB74

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

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.
 
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.

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.

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?
 
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?"
 
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.
 
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.

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! ;)

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...).

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.

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.
 
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.
 
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 :D
 
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 :D

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.
 
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.
 
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

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?!
I am

Unless you provide one of those services where you call to the client's offices and do their bookkeeping etc. onsite,
I do for some clients
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.

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