I would strongly advise contractors never to use the word “employer” when referring to their company’s client – this is also inappropriate from an IR35 viewpoint, when you are operating as an independent business.
Any expenses that you reclaim from your client should be backed up with an invoice – it is bad practice for the client to pay for travel costs, meals or training directly (as typically that is how an employer would treat an employee). It is best for your company to pay for the costs of travel/accommodation then reclaim with a VAT invoice.
You personally will be able to reclaim from your own company any receipted expenses for meals and accommodation on any business trip (and for travel for up to 2 years at the same client site when undertaking a contract). Also you will be able to claim £5 overnight allowance tax free from your company (or £10 per night when overseas). Generally, it is best to bear in mind what costs on this business trip are incremental i.e. what costs you incurred from a business need that you would not have incurred if you were operating back home.
You need to obtain a formal dispensation approval from HMRC to claim a set amount of tax free expenses. We have tried before for clients in your position (ie single owner/managed companies) and have met with little success.
From Graeme Bennett of Forbes Young
I often have the client want to pay for flights and/or hotels as they have a deal or preferred rate. I generally pay the carparking/taxis/meals (even in their preferred hotel) etc and invoice them. How does that stack up as far as “bad practice” goes?
Are per diems a bad idea. There’s a few contractors I know who have offered £25/day per diem instead of a rate increase?
I refused I thought it wasn’t legitimate expense a company should be invoicing for.
[quote name=”mark”]I often have the client want to pay for flights and/or hotels as they have a deal or preferred rate. I generally pay the carparking/taxis/meals (even in their preferred hotel) etc and invoice them. How does that stack up as far as “bad practice” goes?[/quote]
The whole issue revolves around the fact contractors should be operating as independent businesses. If the client pays for anything directly it is bad practice – because this is what they do for their employees. You should be distancing yourself from the client’s employees.
[quote name=”Nigel”]Are per diems a bad idea. There’s a few contractors I know who have offered £25/day per diem instead of a rate increase?
I refused I thought it wasn’t legitimate expense a company should be invoicing for.[/quote]
Yes general daily allowances are a bad idea. As an independent contractor you should be invoicing specifically for the actual expenses incurred in my view. What to claim depends on what’s written in your contract with your company’s client of course.