I do contracting through my limited company of which I am sole employee. I recently got a expense dispenser agreement with HMRC, As I am new to this arrangement I have a couple of questions on this if anyone can explain (I gone through some guide but didn't get the answer) I'll be grateful.

1. Until now pay myself back expense as occur in actual includes Overnight stay, Meals and Travel as the most common and retain all the receipts in accounts. The question is do I still have to payback myself on actual or I can fix certain reasonable amount to cover these expenses and pay that fixed amount back rather then actual.

2. If above is true, do I have to do account of actual somewhere or I just have to kept the receipts for any enquiry.

Please shout if I am not clear here.

Emma
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Emma

You repay yourself the actual amounts incurred.

On enquiry, you must be able to match the expenses claimed with the receipts.

Often in a sole employee company, the company's accountant will do this.

Chris
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I am genuinely surprised that you have a dispensation agreement for a one man (woman) limited company. It is normally a requirement that there is a third party who independently checks the claims

A dispensation does not apply globally to all expenses. When you applied you will (should) have filled in an application form giving details of the expenses you would be reimbursing. The Revenue dispensation will normally have specified in details the expenses that need not be returned on a P11d and will have specified what records should be maintained

Re-read your application and the approval to check
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Bob, it is now very common for dispensations for sole director limited companies.

HMRC guidance on this:

Sole director of your company and you have no other employees ?you will only be able to obtain a dispensation if you:

ensure all expenses claims are supported by receipts for the expenditure
demonstrate that the claim relates to expenditure that can be covered by a dispensation ?your receipts may be sufficient for this purpose, but if not you must retain additional information

Emma, you should only reclaim for expenses that are supported by receipts, and these expenses will be detailed on your letter from HMRC. The only time you can claim 'round sum' allowances is if HMRC have given you a dispensation to do so, however, these sort of dispensations only tend to be given to large businesses and are at pre-agreed rates, this is to help reduce paperwork.

Hope this clarifies matter a bit more.

Jason
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Bob, it is now very common for dispensations for sole director limited companies.

Thanks Jason

As you may have realised, I am now away from the day to day cut and thrust of dealing with HMRC - and not missing it at all :)

That is a very positive change in the Revenue position on dispensations. I know my tax manager was always cursing this time of year - preparing totally useless P11ds and then claiming back the bulk of the "benefit" as a business expense on SA
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