Do you keep receipts?

[JimmyBuzzard]

hello freelancers!

i've read this thread with interest as i'm about to sign up with a contractor umbrella company. curiously, they tell me that i don't necessarily need to keep receipts since they have a special dispensation from the inland revenue. now before you all jump on the first time poster asking a silly question do you guys actually know for sure if i need to keep receipts or are you just spouting off lines that you've heard on other forums and from so say experts? the reason i ask is because the umbrella company i'm referring to has over 6,000 happy customers and i've none of them need to keep receipts so i'm sure the inland would have been in there like a shot if they were doing something criminally wrong?

[hugo@gabem]

Originally Posted by JimmyBuzzard

hello freelancers!

i've read this thread with interest as i'm about to sign up with a contractor umbrella company. curiously, they tell me that i don't necessarily need to keep receipts since they have a special dispensation from the inland revenue. now before you all jump on the first time poster asking a silly question do you guys actually know for sure if i need to keep receipts or are you just spouting off lines that you've heard on other forums and from so say experts? the reason i ask is because the umbrella company i'm referring to has over 6,000 happy customers and i've none of them need to keep receipts so i'm sure the inland would have been in there like a shot if they were doing something criminally wrong?

Okay I'm going to dive straight in on this one. You should keep your receipts regardless, store them somewhere (for the usual 6 years) even if your umbrella company is saying they don't need them. If HMRC do decide to investigate they will be referred to you for proof.

We have a dispensation ourselves, but still require receipts to be sent in for all expenses, it's just best practice. How else can we determine that an expenses has been incurred?

[JimmyBuzzard]

Originally Posted by hugo@gabem

Okay I'm going to dive straight in on this one. You should keep your receipts regardless, store them somewhere (for the usual 6 years) even if your umbrella company is saying they don't need them. If HMRC do decide to investigate they will be referred to you for proof.

We have a dispensation ourselves, but still require receipts to be sent in for all expenses, it's just best practice. How else can we determine that an expenses has been incurred?

i'm not so convinced. why should i keep the receipts if they're not really my expenses? if you think about it logically, the expenses are being reimbursed to me from my umbrella company. So, surely they are business (or umbrella) expenses that i just happen to have paid out of my back pocket. there is definitely some blurred lines here. on the face of some umbrella company websites, they clearly state that they are responsible for the tax if they get it wrong not me, which sort of reaffirms my belief that when people say "keep your receipts when working through your umbrella company, otherwise you will be in trouble with the Inland Revenue" is utter nonsense.

[Malvolio]

It is better to keep silent and be thought a fool, than to speak out and prove that you are one.

Hugo runs an Umbrella, I run a business, we both understand the concept of "audit trail", "self assessment" and "tax evasion". You clearly don't. Which do you suppose is the correct answer?

[TheFear]

Originally Posted by JimmyBuzzard

i'm not so convinced. why should i keep the receipts if they're not really my expenses? if you think about it logically, the expenses are being reimbursed to me from my umbrella company. So, surely they are business (or umbrella) expenses that i just happen to have paid out of my back pocket. there is definitely some blurred lines here. on the face of some umbrella company websites, they clearly state that they are responsible for the tax if they get it wrong not me, which sort of reaffirms my belief that when people say "keep your receipts when working through your umbrella company, otherwise you will be in trouble with the Inland Revenue" is utter nonsense.

Why do you think that they are not your expenses? Who else do they belong to? The umbrella company will issue YOU with a P11D at the end of the tax year, nobody else. Like Malvolio and Hugo have said, if you have falsely claimed expenses that you didn't rightly incur you are leaving yourself exposed to an HMRC investigation. And if you can't prove that the expenses were legitimate, they'll be asking for their money back and I expect they'll also hit you with a serious penalty for non compliance.

Sorry

TF

[Beefy198]

Originally Posted by JimmyBuzzard

there is definitely some blurred lines here. on the face of some umbrella company websites, they clearly state that they are responsible for the tax if they get it wrong not me, which sort of reaffirms my belief that when people say "keep your receipts when working through your umbrella company, otherwise you will be in trouble with the Inland Revenue" is utter nonsense.

Welcome to the wacky world of contractor expenses and umbrella companies!

My best advice is take any advice with a pinch of salt. I've seen some horrendously outlandish claims on umbrella company websites in my time, but it doesn't matter what the marketing material says. HMRC will only be interested in you I'm afraid.

[monstro]

Originally Posted by JimmyBuzzard

i'm not so convinced. why should i keep the receipts if they're not really my expenses? if you think about it logically, the expenses are being reimbursed to me from my umbrella company. So, surely they are business (or umbrella) expenses that i just happen to have paid out of my back pocket. there is definitely some blurred lines here. on the face of some umbrella company websites, they clearly state that they are responsible for the tax if they get it wrong not me, which sort of reaffirms my belief that when people say "keep your receipts when working through your umbrella company, otherwise you will be in trouble with the Inland Revenue" is utter nonsense.

Wow. And that ladies and gents is why sales spiel should always be investigated and not taken at face value.

I'm blown away by you thinking they're not really your expenses. If you're buying a train ticket out of your own money, whose expense is it? Mike the sales guy at your umbrella?

Really this sort of thing makes me angry as it will mean at some point due to a few idiots encouraging what at the end of the day can be classed as fraud, HMRC will come down and pull an IR35 on the umbrella industry sometime in the near future. Most companies, even those with dispensations are compliant. And at the end of it will be people like Jimmy Buzzard here who are the victims.

[Malvolio]

"Victim" is not the word...

I don't suppose he's the guy I know about who's asking for a £500 a month rise in rates to cover the income he'll lose when he goes over the 24 month barrier for travel. Which is a bit of a cheek, considering he lives less than 10 miles from his client's site and I make that a maximum of £88 a month legitimate expenses...

And just to add the icing on the cake, he's known he will be there over 24 months for a while and should already have stopped claiming.

[JimmyBuzzard]

Originally Posted by monstro

Wow. And that ladies and gents is why sales spiel should always be investigated and not taken at face value.

I'm blown away by you thinking they're not really your expenses. If you're buying a train ticket out of your own money, whose expense is it? Mike the sales guy at your umbrella?

Really this sort of thing makes me angry as it will mean at some point due to a few idiots encouraging what at the end of the day can be classed as fraud, HMRC will come down and pull an IR35 on the umbrella industry sometime in the near future. Most companies, even those with dispensations are compliant. And at the end of it will be people like Jimmy Buzzard here who are the victims.

thanks for your words of wisdom. in fact, the responses to my original post reaffirms my belief that the vast majority of so called experts haven't got a clue what they are talking about. not only that, nearly every forum i've ever visited is dominated by one or two people and whatever they say goes. this place is no different.

to use your example, the way i see it, if a train ticket is reimbursable by my employer, regardless if they are an umbrella company or not, that expense belongs to the employer, not me. if it didn't belong to them, then why are they paying me back for it?

i have spoken to the umbrella in question again over the last couple of days and they seem to be in broad agreement with this. i'll be signing up with them today. when i start working, i will however keep the receipts for the expenses i incur on behalf of the umbrella just to satisfy myself that i am operating 100% within the law.

[Malvolio]

FFS... Let's try an explain in words of two syllables...

Who bought the train ticket? You or your employer?

If it's you - as I suspect it was - then how did you pay for it? Out of your own pcket, I'm guessing, which means out of your income on which you have already paid the tax.

So since the train ticket is not liable to tax as a business expense, you are entitled to get it back.

Hence your employer gives you back the cost of the ticket and the standard income tax and PAYE that goes with it (and he gets back the employer's NIC he has paid as well) so in effect you haven't paid tax on the bit of your salary that bought the ticket

Umbrellas kind of roll up these various transactions to keep the books simple, but that's the principle at work.

And if you don't understand such basics, don't even think about challenging those of us who do.