IT Contractor - Claiming expenses question?

T

TurningGreen

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Hi

I am a self employed (sole trader) IT contractor. Last year I got an IT contract in Dublin (living in West) and travelled up Sunday and returned Thursday or Friday to west. My accountant now doing my returns and has informed me that I should not be claiming expenses for rent and food. Is he correct in this? If this is the case I will have spent a very hard year and a half working away from home and by my calculation be lucky to have made the minimum wage? How do other contractors survive if this is the case? Any thoughts much appreciated. Thanks
 
I dont know for sure but I think you can only claim expenses that are directly related to the job. I know your arguement but I think the other side of it is that you have to live somewhere and eat meals regardless of your work. So in that view it is not a direct expense.

You should be able to claim milage though..?
 
TurningGreen said:
Hi

I am a self employed (sole trader) IT contractor. Last year I got an IT contract in Dublin (living in West) and travelled up Sunday and returned Thursday or Friday to west. My accountant now doing my returns and has informed me that I should not be claiming expenses for rent and food. Is he correct in this? If this is the case I will have spent a very hard year and a half working away from home and by my calculation be lucky to have made the minimum wage? How do other contractors survive if this is the case? Any thoughts much appreciated. Thanks
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Read this and note in particular the difference between the structure and tax efficiency of being a limited company vs. you as a sole trader.



In my opinion you would be only entitled to 1/nth of the rent + utilities of an n bedroom home plus mileage etc only if you considered your rented place an "office" to your limited company.

If you're earning just over minimum wage ( before rent + etc ) then you should probably look into the Daily rate you're currently being paid.
 
Hi

Thanks all for reply. What my accountant is saying is that since I was working on the customer site 4/5 days per week, the cost of renting accomodation and food is my own expense as it could be seen as my normal place of work since this was my only customer. My accomodation & food was approx 950 per month. Not to be able to claim at least part of this would serverly hit my takings. I am a one man band & impossible to work for more than one customer as suggested by accountant, which I believe would help things since I would then be seen to have multiple customers. Hope above makes sense.
 
Who were you planning on claiming the expenses from? The customer? I dont think a sole trader can claim mileage etc.
 
xabi said:
Who were you planning on claiming the expenses from? The customer? I dont think a sole trader can claim mileage etc.
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No, certain expenses are claimable against the gross amount paid to the soletrader. This reduces the amount they have to pay tax on.
 
No, you actually claim mileage rather that fuel. At least that is what my accountant is doing and I am registered as a sole trader.
 
Mileage only applies to Directors and employees of companies, Sole traders can only claim actual expenses incurred, so not mileage.
 
There seems to be a difference of opinion on expense and mileage even between accountants. I can't see how I can make a go of IT contracting since most of my contracts would be in Dublin and not the west and would tend to last for a year. May have to reluctantly look to relocating back to Dublin so that expenses/mileage is a minor cost rather than the major cost at the moment. Mathepac my accountant did also mentioned your observation of 'employee / self employed' and I had a look at the link supplied. Going by the definitions (monthly salary, supply labour, answer to somebody in company etc etc) most contractors (IT anyway) could just as easily be defined by revenue as employeed rather than self employed going by the definitions but the question then arises how companies can offer 'contracts' instead of fixed periods of employeed work if you know what I mean.
 
No, your accountant is correct. You can only claim expenses and millage if it's for travel to somewhere which is not your "regular place of work". You've been working for the same client for months (or even a year) so there is no way that you can claim these expenses.

If you do claim these expenses and are audited at any stage you'll be done for sure.

This was considered a loophole and was closed off many many years ago as it was a common dodge for contractors to use their parents' or a friend's address as their "residence" or business address and claim daily expenses for having to work "away from home".
 
I can't see how I can make a go of IT contracting since most of my contracts would be in Dublin and not the west and would tend to last for a year. May have to reluctantly look to relocating back to Dublin so that expenses/mileage is a minor cost rather than the major cost at the moment.
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Why can't you just work from home?
IT contracting is ideally suited to this.
 
umop3p!sdn said:
Why can't you just work from home?
IT contracting is ideally suited to this.
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any client i have worked for have insisted i spend the majority of my working week on-site - it is only the out of hours support that is generally suitable to working off-site
 
any client i have worked for have insisted i spend the majority of my working week on-site - it is only the out of hours support that is generally suitable to working off-site
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Well that's unfortunate for you.
I've had better success. I suppose it depends on how forward-thinking the client is. Surely this commuting malarkey is old hat by now.
 
Yep I have had the same problem where the clients wants to see the contractor on site for assurance and comfort. If it was programming I suspect you would have a better chance at working from home.
 
umop3p!sdn said:
Well that's unfortunate for you.
I've had better success. I suppose it depends on how forward-thinking the client is. Surely this commuting malarkey is old hat by now.
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i actually prefer it and commuting is a pleasure (not a chore) ! i travel by motorbike so can very happily access all areas of dublin and surrounds without too much hassle and a quick blast will clear any cobwebs away.

also i work as dba/sys admin so i do need to be onsite most of the time....

but TG is right - some mates who are developers/analysts do work from home.
 
Self employed - ten ways to save tax



1. Employ a family member – make use of all family members tax credits who are not working and therefore reduce your liability by up to €4,000.
2. Form a partership with your spouse if they have no income, to stop your profits being taxed at the higher rate and save up to €6,000.
3. E learning – save up to €1,200 by having an allowance for a relative doing some valuable research on line for you !!
4. Pension - despite the bad press, choose a pension which is minimal risk, and reduce your annual tax bill.
5. Employers – know the different tax class’s in regard to PRSI – paying over €356 a week instead of €355 will cost you an addition €400 in PRSI alone !!
6. Keep all your medical expenses and claim them in the MED 1 form
7. Keep all your church / charitable donations and claim them as an expense.
8. If you work from home for your business either partly or fully, remember some of the house hold bills can be written off as a business expense. This could include light and heat, insurance, telephone bills, broadband etc
9. Seed capital relief – This scheme which runs to 2013 is designed to encourage those set up in business after they cease employment. Relief is given as a refund of PAYE for the 6 years previous to ceasing employment and the maximum relief is €91,440.
10. Get a good accountant !
 
Assuming that people here want actual advice as opposed to illegal methods to save tax/money then I would not recommend either of the following:

1. Employ a family member – make use of all family members tax credits who are not working and therefore reduce your liability by up to €4,000.

or

3. E learning – save up to €1,200 by having an allowance for a relative doing some valuable research on line for you !!

If we're recommending ways to save tax illegally then the simplest is to get paid in cash and don't declare it!
 
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