Mileage Claims through Client

[AlanR]

Hi,

Had a search on the forum but couldn't find an answer to my question so, apologies if this has been addressed in the past.

I claim mileage between my (home) office and my clients at the usual rates - 40ppm up to 10k then 25ppm.

I have just been successful in winning some work for one of my clients that will require me to travel to a site where my client is, essentially, Project Managing the installation. Included in my bid was an element to cover expenses and what i would like to confirm is whether i am correct in my approach to claiming expenses (including mileage) through my client, so here goes:

1. Submit expenses claim through client system using my extant mileage rate, that is, if i have claimed less than 10000 miles through my ltdCo, i can claim at 40ppm else it is 25ppm. Is this correct or the fact that i am claiming through another company means i could claim 40ppm regardless if my ltdCo mileage is > 10000miles?

2. Once expenses paid to LtdCo, pay expenses to myself as per normal.

Will these expenses have to be accounted for differently to that i incur in my day-to-day running of my LtdCo?

Any info / advice on this approach welcome.

Regards

Alan

 

[Zeno]

I am afraid you are slightly confused. The mileage you charge to the client is just a further calulation of your charges to them in the same way your hourly rate is. You can charge whatever rate you like so long as it is agreed by the client.

It is the part that the company pays to you (albeit for the same mileage) that is subject to the approved rates.

 

[elaine@cheapaccounting]

I would avoid submitting an expenses claim through a client system for 2 reasons I can think of at the moment:

- if you are vat registered then this is a supply to your client and vat needs to be charged. So add ti to the sales invoice

- this could be deemed to be an indicator of being employed by them i.e. using the same system as their employees (IR35 implications)

Process just needs to be:

- add your agreed expenses as a line item in your sales invoices and add vat if applicable. Record as sales

- claim your expenses back from the business in the normal way

Net effect on your profit is nil, so no CT implications.

 

[AlanR]

elainec

Many thanks for that.

Am i right in thinking that claiming back mileage expenses (i.e. 40ppm) would not be VAT'ed.

Regards

Alan

 

[elaine@cheapaccounting]

elainec

Many thanks for that.

Am i right in thinking that claiming back mileage expenses (i.e. 40ppm) would not be VAT'ed.

Regards

Alan

I would say that you would have to charge vat on it.

Have a read of the rules here:

http://www.hmrc.gov.uk/vat/charge-disbursements.htm

 

[AlanR]

i have just checked with the client and they are insisting that any expenses are to be claimed back through their system.

So, i suppose the question is, is it worth the potential implications of claiming back expenses in this way?

Alan

 

[Zeno]

Quite a common problem. Also, as Elaine says a bit of a red flag to HMRC that you are empoyed.

Your company can still pay you the mileage at the approved rates even if you have not charged anything to your client. This will still give the tax relief but you will be out the actual cost of the travel.