Quick question, IT contracting - agencies

[briantvr350]

Hi guys,

Very quick question, (my accountant is on holiday at the moment) I am currently on a contract which involves me working on multiple sites driving my own vehicle between sites.

Getting paid for the work is no problem, invoice + timesheet signed by client every week = payment via BACS 2-3 days later..

Getting paid for mileage.. The agency wants me to submit a mileage form again signed by the client, which isn't a problem. BUT, before they will pay me they want an invoice from me, which I'm not sure is right.

Is it sufficient (for HMR&C purposes) to state on an invoice that this is a non taxable expense claim, or is there another simpler method of getting round this problem?

I don't want to pay tax on legitimate business expenses.

I'm using my own limited company not an umbrella company

Regards,

Brian (and a Red 350i)

[Eric Mc]

You can't have it both ways.

If you are claiming to be a legitimate trading operation - as you no doubt are in order to minimise exposure to IR35 and all that entails, it is expected that you would bill your customers for the work you do - including billing in order to recover whatever costs your business incurrs, including expense claims.

The follow on is, of course, if you are VAT registered, your expense "claim" invoices should be VATted in the normal way.

To be honest, it should be no big deal for your customer or you. Your customer will claim back whatever VAT you charge them any way, so it doesn't make matters any more expensive for them.

And why do you think you will pay tax on these expenses?

If you are merely recouping costs, the income received should match the cost incurred. If there is no profit element, you won't suffer any tax.

Edited by Eric Mc on Friday 18th May 10:07

[briantvr350]

Eric,

am I looking for problems that aren't there?

Is it sufficient for me to issue an invoice as follows:-

Work w/e 19/5/2007, 37.5 hours @ £xx per hour £yyy

Mileage expense, zz miles @ £y.yy per mile £www

Total = £yyy + £www =£vvv

Just to be clear, vehicle is privately owned and maintained, no costs are paid for by the company and I pay myself £0.40 per mile driving to and from jobs, which includes the drive from home to base in the morning and base to home in the evening. The mileage between calls during the day I claim from the client, via the agency.

Total annual business mileage will be less than 10,000. Incidentally, do BOTH mileages count towards the 10,000 before HMR&C start seeing a profit element?

Regards,

Brian (and a Red350i)

[Eric Mc]

The format you describe above for the invoice is correct - not forgetting to add the VAT amount on the total value of the amount you are billing (expenses included), of course.

How you recover the expense claim from your own company is (literally) your own business and need not be disclosed or discussed in any way with your customers. Indeed, whether you chose to disclose any expense amounts on your sales invoices is really down to you. I never show expenses on my invoices, I just try to ensure that my overall bill level is sufficient to generate adequate profitability.

[briantvr350]

Thanks for that Eric...

I have always done as you suggest in your reply, trying to pitch the amount of detail on the invoice at a reasonable level without revealing exactly how the end figure is arrived at. I always price a job I have to drive 10 miles to at a higher rate than one I can walk round the corner to, without actually detailing the additional cost on the invoice.

Regards,

Brian (and a Red 350i)