We’ve recently noticed some of our PSC clients making expense claims which are outside of those permitted by HMRC.
This may well be a hangover from people being used to the somewhat generous interpretations of expense rules by old style MSCs and the MSCs lack of scrutiny of their clients claims – one of the reasons behind the governments clamp down on the use of MSCs.
A few common problems we’ve noticed:
24 month rule.
This applies for claiming travel from your home to site, or overnight accommodation. The 24 months is measured on expectations for time in the work place – this means if you sign a 30 month contract then you can’t claim, not even for the first 24 months. If you sign a 20 month contract but extend it for another 12 then you stop claiming as soon as you sign the extension.
Also on the 24 month rule, its based on the length of time making a similar journey. If you worked at the same location via a MSC, another PSC or even were directly employed before your current contract, then that time counts towards the 24 month test.
If you move to another contract close by so your journey is substantially the same then the move is ignored; the two sites and employments are aggregated.
Finally the 24 month rule relates to reimbursing expenses for attending a temporary work place. If you only have one workplace during the life of your employment then HMRC take the view it can’t be temporary – this has caught out a lot MSC operators and employment agencies, but applies equally to someone operating a PSC.
There are no set amounts that can be claimed for daily subsistence on site. It’s a myth perpetrated by MSCs abusing agreements with HMRC.
Generally no claim is possible for food and subsistence in your regular work place, with a few exceptions:
– If you are staying away overnight then a evening meal plus modest alcoholic beverage is allowable
– If you are making a journey away from your regular work place, eg visiting another site or for a course, then reasonable subsistence can be claimed – so called “Occasional business journeys outside of the normal pattern”.
HMRC have some useful guidance on the above at https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim47705