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Business Trip Allowance

Discussion in 'Accounts & Finance' started by davek17, Oct 15, 2010.

  1. davek17

    davek17 UKBF Newcomer Full Member

    Posts: 440 Likes: 97
    Hi There

    I'm really tired of all the receipts I keep for business trips and claim back for. I used to work for a company that just gave me a daily allowance and I kept receipts for just in case reasons but never clkaimed on a per receipt basis.

    Is this something I can still do as a Director of a ltd company and does it mean I do not have to keep receipts any more for each trip?

    Any tips or pointers would be greatly received.

    Posted: Oct 15, 2010 By: davek17 Member since: May 14, 2009
  2. Philip Hoyle

    Philip Hoyle UKBF Ace Free Member

    Posts: 2,218 Likes: 1,078
    When you were an employee, it sounds like HMRC had given your employer a dispensation allowing them to pay round sums without having the hassle of them having to check and record every single receipt. The dispensation is for their benefit not yours - you still have to keep "proof" of your spending covering by your round sums in case of personal tax enquiry into you. To get a dispensation, your employer would have had to satisfy HMRC that expenses claims were properly authorised and that the round sums were reasonable approximations of actual spending.

    Fast forward and you now have your own company. If you're the only director, then there is no-one else who can "authorise" your expenses claims. This is the most common reason for HMRC not granting dispensations to one-man limited companies. It is possible to overcome this, i.e. by having another director or company secretary, or sometimes using your accountant to rubber stamp your claims, but sometimes HMRC will simply not budge. Also, these days, they seem to want to see specimen expense claims and supporting "proof" in terms of receipts etc for sample claims, to justify the amounts you want to claim as round sums. All in all, quite a hassle, and despite HMRC saying that they're open for one-man firms applying for dispensations, we've certainly found them to be obstructive and quite random as to which firms are granted them and which aren't.

    All in all, considering you need to keep receipts anyway in case of personal tax enquiry, and you need VAT receipts if you're wanting to reclaim the VAT paid, my advice would be to accept the need for keeping receipts and claiming the right amount. You can make life simpler by using the company credit or debit card to pay directly for more - so that the record of payments are shown on the bank statements, and to minimise the "out of pocket" cash payments which are probably the source of your frustration. Also, how about keeping either a small 50p diary to make notes as you go or make notes on your mobile phone or blackberry or whatever - you don't need receipts for absolutely everything - a simple record of spending £1.50 for a coffee at the train station is adequate - easy to note in your diary or on your mobile whilst you're drinking it!

    The paperwork etc only becomes a problem when your "housekeeping" is poor - i.e. where you just throw the receipts in your briefcase or stuff them in your wallet or pocket and that don't do anything with them for weeks and then need to spend a few hours trying to pull them all together. Organise yourself, do it daily and keep a note, and it's not a problem at all.
    Posted: Oct 16, 2010 By: Philip Hoyle Member since: Apr 3, 2007
  3. Hydra

    Hydra UKBF Newcomer Free Member

    Posts: 22 Likes: 10
    Perhaps I am old fashioned, and accept most of what Philip says, however I have only ever met a few people (ie non self employed/owner directors) who are so anal retentive as to note on their mobile about having a coffee at a train station, and then subsequently transferring that note as a diary entry for inspection up to six years later.

    The simplest solution is to consider what yu as director would do if an employee were to look reimbursed for expenses. What would you accept?

    1. A coffee at your local train station, I'd say no (you should have brought a flask).. A cuppa at your customers train station, i'd say yes..

    2. A 20 quid 3 course meal (with one beer) when staying away overnight. I'd say yes. A £50 bill of which £35 is Double Hennesseys. I'd say No.

    As a director, its your money and I'd happily suggest putting any recipts in an envelope once a month, and writing yourself a cheque. Don't worry about personal tax return enquiries. HMRC prefer to hit the company before individuals, as they get more money for their trouble, and as long as you can look the dimwitted compliance PAYE officer in the eye and justify it, you will be ok. HMRC send the chaff on visits, the intelligent ones remain in the office.

    Keep receipts for everything, and throw out the ones you cant justify. As for keeping credit card bills, if a personal credit card, best not show these to HMRC without a written request setting out the remit under which they are asking.

    If you present some compliance officer with 12 monthly envelopes, they will realise you keep decent records, and unless something is glaring unclaimable, human nature will mean they give them a cursory glance.

    If they are so pedantic to go through all the envelopes, think of it as a victory in using up their time on small stuff, when you know dammed rightly if they spent more time on other areas, they'd find something to really hit you with. :)

    A friend once paid rent on a flat for his weekly sex sessions with his mistress. HMRC found an employee(a cleaner) in petty cash without a P46, and ultimately hit him for less than £200 quid. The whole laugh was that the cleaner was his mother, who didnt clean, but was remarried, (ie a different surname). He still laughs at how dense the Inland Revenue actually are..
    Posted: Oct 16, 2010 By: Hydra Member since: Oct 6, 2010
  4. davek17

    davek17 UKBF Newcomer Full Member

    Posts: 440 Likes: 97
    Many thanks guys.

    We keep absolutely impeccable records here. Everything is reconciled up monthly and we are watertight on our accounts. Everything is paper replicated and stored neatly whether it's invoices, expenses or statements.

    I work long hours as do my partners as we're very passionate about what we do but not necessarily about expesnes at the end of the month!! Expenses are high as we're on the road so much, we have to claim for them or we'd be broke! I think I will stick to recording everything and not getting into a situation I would later regret. At least this way we will have records and won't get into trouble that way. I was just hoping to for an easier way of doing it but I guess when I think about it, it's not the best way to go.

    Cheers for the help.

    Posted: Oct 18, 2010 By: davek17 Member since: May 14, 2009