Interesting discussion going over on aweb at the moment, that I have well and truly waded into! I would be interested to know how the good folk of BKN would handle the following scenario.
You are the person doing the client's tax return, a subcontractor on various sites, and he presents you with petrol receipts and repair bills.
Knowing he doesn't have a vehicle, as he doesn't drive, you question this and it transpires he's a passenger in his brothers van, also a subcontractor, and this is his way of contributing towards the running costs. The bills presented are what the client has paid himself, with the brother claiming the rest against his own tax return.
So allowable W+E, or should the brother pay and claim the whole costs and charge your client a percentage, declaring it as income on his own tax return?
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi John, posting from my phone at the moment which I hate.
Only had a quick look but I would allow fuel payments with receipts to back them up but disallow the repairs
__________________
Doug
These are only my opinions of how I see things and therefore should not be taken as advice
I considered that option myself as well. If an enquiry was raised on the Tax Return, would HMRC be happy with that do you think?
Hi John,
The way I would see it is that the client has actually paid for the fuel and received a receipt as proof of payment, ideally he/she would also have evidence of the payment on a bank statement, this payment is to enable the client to travel to work which is an allowable expense, I know it can be argued that the brother is also travelling to work but as long as the fuel is only being claimed for once I do not see how HMRC could or would challenge this arrangement.
The repairs I feel are completely different, I think the brother would be the only person who would be able to claim the costs as an expense because he has ownership of the vehicle, I think if repairs are going to be brought into the equation then you would also have to consider other expenses such as MOT, Vehicle Tax and Insurance, not sure on how HMRC would view this arrangement but I would probably be advising my client not to include these repairs on their return.
As you say an interesting one and a shame that it has had over 40 views but no one else has offered an opinion on the subject!
__________________
Doug
These are only my opinions of how I see things and therefore should not be taken as advice
I'm sure Joanne will throw her tuppenceworth into the mix when she has a spare moment and I'm kinda hoping Shaun picks this up as well. Come on the others, have your say, it's an interesting one and whilst I'm usually flexible in other things I've taken a different view on this one.
I get what you're saying Doug and there's a part of me nodding my head but how do you get round the private use element? Let's just say there's 25% private use by the brother and client has paid 50% of the fuel costs, say £1k. Should he be claiming £1k or £750?
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
I get what you're saying Doug and there's a part of me nodding my head but how do you get round the private use element? Let's just say there's 25% private use by the brother and client has paid 50% of the fuel costs, say £1k. Should he be claiming £1k or £750?
Hi John,
Funny enough I have yet to meet a builder who uses his van for private use but we'll save that for another day
In my opinion private use does not enter into this scenario, my thinking is that if you have 2 people both travelling to the same site to carry out their work and that to save costs they decide to travel together.
So just as an example they work out that to get to work and back for the week will cost £200 in fuel and decide to put £100 in each with each of them claiming back this amount in expenses, you cant expect the passenger to pay for the fuel at any other time except for when it is being used for work any other use would be additional fuel that the owner would pay
__________________
Doug
These are only my opinions of how I see things and therefore should not be taken as advice
So just as an example they work out that to get to work and back for the week will cost £200 in fuel and decide to put £100 in each with each of them claiming back this amount in expenses, you cant expect the passenger to pay for the fuel at any other time except for when it is being used for work any other use would be additional fuel that the owner would pay
That's a fair point.
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
To put the cat amongst the pigeons, could the driver also claim the 5p a mile for carrying a passenger. Just a thought. I personally would allow the petrol with receipts but not the repairs.
To put the cat amongst the pigeons, could the driver also claim the 5p a mile for carrying a passenger. Just a thought. I personally would allow the petrol with receipts but not the repairs.
Hi Debbie
Happy to be corrected but I thought that the passenger payments of 5p per mile were only available for employees
__________________
Doug
These are only my opinions of how I see things and therefore should not be taken as advice
To put the cat amongst the pigeons, could the driver also claim the 5p a mile for carrying a passenger. Just a thought. I personally would allow the petrol with receipts but not the repairs.
That was my very first thought when I saw the thread but as Doug has pointed out, it's only available to employees.
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Interesting one John. Ive not read A-web ( no time). Will take a look at this properly later. But initial thoughts - exactly what would happen if HMRC do a drill down inspection (and they do!) and they want to look at MOT records for mileage and the like.
Doug - I must say I did laugh out loud at the thoughts of van drivers who dont use their vans for private use. Sorry mate, but that isnt the case 'oop norf' - Ive seen two this weekend alone. I know a man who camps in the back of his with his family!
Laters boys.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
What do you guys reckon to them properly sharing all the van costs (fully documented and subject to any personal use adjustments)?
Shaun?
Hi Joanne
Not sure I would be to happy if I was offered a lift to work and was then asked to share all the costs (minus private use) including MOT, Tax, Insurance as well as repair bills.
I think the private use would be the stumbling block for me, what would happen if the owner was using the van at the weekend for private use and the engine blew up would the passenger still have to pay his share of the repairs? I can see there being a lot of future arguments with this approach
__________________
Doug
These are only my opinions of how I see things and therefore should not be taken as advice
Personally I think the brother with the van should pay all the costs through his own SA then let his brother pay half towards the fuel costs (more to cover wear and tear if they both agreed). The brother with the van declares that "income" and the other brother claims it on his SA Keeps it tidy and less chance of a messy inspection.
Doug's way fine too but I see a risk in HMRC not liking it if there's a quibble over private mileage.
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Personally I think the brother with the van should pay all the costs through his own SA then let his brother pay half towards the fuel costs (more to cover wear and tear if they both agreed). The brother with the van declares that "income" and the other brother claims it on his SA Keeps it tidy and less chance of a messy inspection.
Doug's way fine too but I see a risk in HMRC not liking it if there's a quibble over private mileage.
Just thought I would throw something odd into the mix. I agree with you.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
but we'll save that for another day
