Company car/expenses

yop · 21-10-2014 8:30am #1

Hi,
I'm a director and employee of my own company. I'm an IT contractor and I have only 1 client.
I travel to their site between 2 and 3 days per week, the trip is 190km round trip.

I know revenue have stopped IT contractors from claiming subsistence so I can't claim that, but as a company can the company purchase a company car and then give me the use of it. I know I will pay BIK at 30% of the OMV but is there any other channels, legal of course!!, as to how I might get the cost of my diesel if I use my own car.

thanks

dbran · 21-10-2014 9:29pm

In your circumstances as described, absolutely no chance of claiming the cost of the commute from home to work on site as a business journey.

Will almost certainly cause a revenue audit.

dbran

Doom · 21-10-2014 9:32pm

Yip....cannot claim "travel and return to normal place of work"

yop · 22-10-2014 11:44pm

Thanks lads.
So would having a company car ease the "pain" of forking out for diesel or am I still caught?

IITYWYBMAD · 23-10-2014 3:09pm

Can I ask an amendment to this question. I'm a director of a company, and my normal place of work is 30KM's round trip, which I know I have no chance of claiming under a mileage allowance (I own and expense my own car).

However, I fly quite regularly, and the trip to the Airport is 48KM round trip. Can I expense the full mileage claim (48Kms) to the Airport or is it just the difference between the commute to my office and the commute to the Airport, or nothing?

Gilma2010 · 23-10-2014 3:19pm

From what I understand, if you are travelling to a customer, you can claim mileage starting either from home or from the office, which ever point is the closes to the customer.
I have a work from home clause in my contract, so this is how it works for me.

The office is 40 miles from my house, on the north side of Dublin. I always make sure to visit a customer on my way to the office, that is on the north side of Dublin. The office is on the south side, so I do my south side calls starting from there. That way I keep personal mileage to a minimum during the week.

I hope that helps. It's a very confusing subject.

For the record, I wouldn't recommend a company car unless you do a lot of business mileage, over 18k for it to be worth your while. Especially if you cannot offset other monthly expenses (lunch, tolls etc) against your personal mileage deduction. The BIK pushes up your USC charge as well as PAYE and PRSI. I am paying €480 per month on a Ford Focus 2010.

mozattack · 23-10-2014 8:46pm

Since the Contractors Project the rules are for the taking and I am convinced if you put 10 people in a room, 5 Revenue, 5 Tax Advisors and ask them seperately some questions you would get different answers.

It is gone to the stage where I had to say "i am not really prepared to advise in this area" in less obvious situations. Shame really.

mozattack · 23-10-2014 8:49pm

How about this one?

I sense the BIK is too high so I buy a "van", one of those commercial jeeps which qualify as a van and it costs €50k. I horse around in it to my delight and suffer the notional pay at €2,500 - worth it.

I then hear that Revenue are suggesting that there should be an addback for personal use of the vehicle expenses in the P&L with the addback going through directors current account - irrespective of the BIK being imposed on same.

Hmmmm - this has happened and confirmation to the contrary was hard to get

NewApproach · 24-10-2014 12:12am

mozattack wrote: »

How about this one?

I sense the BIK is too high so I buy a "van", one of those commercial jeeps which qualify as a van and it costs €50k. I horse around in it to my delight and suffer the notional pay at €2,500 - worth it.

I then hear that Revenue are suggesting that there should be an addback for personal use of the vehicle expenses in the P&L with the addback going through directors current account - irrespective of the BIK being imposed on same.

Hmmmm - this has happened and confirmation to the contrary was hard to get

Are you saying Revenue have done this in the past? What are their grounds?

barneystinson · 24-10-2014 8:00am

NewApproach wrote: »

Are you saying Revenue have done this in the past? What are their grounds?

The only grounds they could have would be that it didn't meet the wholly & exclusively test under s.81 but I can't see how that argument could be sustained.

yop · 24-10-2014 9:29am

Gilma2010 wrote: »

From what I understand, if you are travelling to a customer, you can claim mileage starting either from home or from the office, which ever point is the closes to the customer.
I have a work from home clause in my contract, so this is how it works for me.

The office is 40 miles from my house, on the north side of Dublin. I always make sure to visit a customer on my way to the office, that is on the north side of Dublin. The office is on the south side, so I do my south side calls starting from there. That way I keep personal mileage to a minimum during the week.

I hope that helps. It's a very confusing subject.

For the record, I wouldn't recommend a company car unless you do a lot of business mileage, over 18k for it to be worth your while. Especially if you cannot offset other monthly expenses (lunch, tolls etc) against your personal mileage deduction. The BIK pushes up your USC charge as well as PAYE and PRSI. I am paying €480 per month on a Ford Focus 2010.

And my business mileage would not be that mileage that 190km trip to the customer site from my registered home office?

barneystinson · 24-10-2014 9:38am

yop wrote: »

And my business mileage would not be that mileage that 190km trip to the customer site from my registered home office?

The important word in that sentence is HOME.

yop · 24-10-2014 9:40am

barneystinson wrote: »

The important word in that sentence is HOME.

I think I understand you

So if my registered office wasn't my home, it is in fact a separate building, then I could probably claim the mileage from my registered office to the customer side on the 2 or 3 days I visit them.

NewApproach · 24-10-2014 11:33am

barneystinson wrote: »

The only grounds they could have would be that it didn't meet the wholly & exclusively test under s.81 but I can't see how that argument could be sustained.

Yes that would be my opinion also. As far as I see if you have a company van and operate the 5% BIK, 100% of the costs of the van meet the provisions of s.81 - the element used for trade purposes is obviously fine, the private element is a employment benefit and BIK operated accordingly.

dbran · 25-10-2014 2:11pm

IITYWYBMAD wrote: »

Can I ask an amendment to this question. I'm a director of a company, and my normal place of work is 30KM's round trip, which I know I have no chance of claiming under a mileage allowance (I own and expense my own car).

However, I fly quite regularly, and the trip to the Airport is 48KM round trip. Can I expense the full mileage claim (48Kms) to the Airport or is it just the difference between the commute to my office and the commute to the Airport, or nothing?

It depends. If the trip to the airport (and assuming overseas) is as a result of fulfilling the duties of the contract for your normal customer, then you may be able to claim for the trip to the airport plus the flights to the temporary work location overseas as a business journey. (Or the cost of the travel from the normal place of work and the temporary place of work - whichever is the lessor) The expenses can be reimbursed gross without deduction of payroll taxes.

If the trip to the airport is as a result of a separate customer that you also work with, then it cannot be claimed as a normal business journey and any reimbursement of these expenses cannot be made without deduction of payroll taxes.

dbran

dbran · 25-10-2014 2:30pm

yop wrote: »

I think I understand you So if my registered office wasn't my home, it is in fact a separate building, then I could probably claim the mileage from my registered office to the customer side on the 2 or 3 days I visit them.

No.

It makes no difference where you put your registered office, whether it is at home or whether you go to the trouble of renting another building somewhere else.

If you are providing a service through an intermediary company to the extent that the customer is effectively contracting to obtain your services (and not the company's), then the normal place of work is the place where the customer is situated and will never be at your home or at another registered office that you care to chose.

If you can argue that you are not contracting through an intermediary ie that your company is in fact trading in its own right and customers are purchasing the services of your company and not you in particular, then you may have a chance to argue such a trip from your home to the customer may be allowable as a business journey. This would come down to such things as number of customers, the nature of the work, whether you take direction from the customer etc. It is a very expensive thing to get wrong. It would be a very complex area and is highly dependent on the circumstances.

There is a letter response from the revenue on the Institute of Taxation site which sets out their thoughts on this issue as well a on revenue.ie

dbran

mozattack · 25-10-2014 3:34pm

barneystinson wrote: »

The only grounds they could have would be that it didn't meet the wholly & exclusively test under s.81 but I can't see how that argument could be sustained.

I agree with this but I've heard it on the grapefine from firms working in a certain area of the country. Tried to get confirmation that this WASN'T the case from RTS and the question was ducked which makes me suspicious.

NewApproach · 25-10-2014 8:04pm

mozattack wrote: »

I agree with this but I've heard it on the grapefine from firms working in a certain area of the country. Tried to get confirmation that this WASN'T the case from RTS and the question was ducked which makes me suspicious.

Revenue can't make up their own rules as they go along though.

Gard1 · 26-10-2014 11:46pm

yop wrote: »

Hi,
I'm a director and employee of my own company. I'm an IT contractor and I have only 1 client.
I travel to their site between 2 and 3 days per week, the trip is 190km round trip.

I know revenue have stopped IT contractors from claiming subsistence so I can't claim that, but as a company can the company purchase a company car and then give me the use of it. I know I will pay BIK at 30% of the OMV but is there any other channels, legal of course!!, as to how I might get the cost of my diesel if I use my own car.

thanks

The key to this is that you have 1 client. Effectively, despite being self employed, in the eyes of revenue, you are a direct employee of the company. Therefore their premises is deemed to be your workplace and the commute between your home and their office is in effect a commute to work. It also raises questions about other expenses you would be claiming and is an area revenue are delighted to probe into. If you had more clients you could claim from your own office to theirs no problem.

Company car/expenses

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