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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I have been working consultancy company years

Resolved Question:

I have been working for my consultancy company for two years at a customer site (which involves me staying away from home during the week and claiming Travel and Subsistence costs to the tune of approximately £16K per annum).
The company Tax Advisor warned the company back in August 2015 that I would be going beyond the 24 month temporary secondment period. My company told me they were aware of this and charged the customer for my T&S as well as a very large chunk of specific Tax Liability costs (worked out as 2/3 of the likely T&S spend (I am a higher rate tax payer)).
My company told me to keep claiming my T&S using the normal company procedures (ie company credit card and reconcile every month or so). My issue is that I caught sight of an email from the company a few weeks before my 2 year anniversary at the customer site, suggesting that the business need to complete a P11D passing the tax liability on to me personally and that the business would take a view as to whether to reimburse me or not.
Naturally I spoke with my boss who said of course they would reimburse me, probably via a gross payment (which would artificially inflate my salary). However my company has a history of not honouring verbal agreements, so I asked for this in writing, confirming that the company would reimburse me for all of personal tax liability (including the lost child benefit I would now have to pay back due to the artificially increased salary).
Inevitably three weeks later there has been no letter from the company - despite me badgering them for it constantly. I agreed with my immediate Line Manager that I would not attend the customer site at all into the third year - as this would guarantee that I had not attended the customer site beyond the 24 month period (which is maximum allowable for temporary work stations), as well as not increasing my personal tax liability.
This is a long and, for me, sad and slightly scary story - as at present I am now in hock to the taxman for nearly £6K (£4K P11D, £1.8K Child Benefit). My company has been paid the money by the customer but wants to 'draw it down as profit', or 'steal it' as my wife describes it. Just to add to the whole nonsense, my company is about to lose out on this as the customer will be demanding their money back in a moment as I'm not on their site delivering for them.
So, is there any way that I can pass this tax liability back on to my company? I have already pointed out that they are a very large company; that they employ tax advisors, lawyers, commercial managers, financial managers, project managers and delivery consultants like myself. I have followed the instructions that my company have given me, that is to say continued claiming T&S via the system they have in place, and I have stopped going to the customer site the day before my two year anniversary - so I have not been attending the 'temporary' workplace for 2 years.
At present I feel totally helpless - I have followed the company rules and yet the bot***** *****ne is that I am being asked to pay for the supra-profit that the company wishes to make on this contract out of my salary.
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. I am at a loss to explain your employer's 11D return if you ceased temporary duty just before the 2 year limit unless, of course, it was for some other benefit in kind that you received. As for child benefit that entirely reflects income received and is interim and finalised at each year end. No doubt you will wish to follow up on my reply so far.
Customer: replied 1 year ago.
Keith the contract was let in August and took me beyond the two year period - HMRC rules state unequivocally that if the intent is to remain beyond the two year position then the temporary workplace becomes permanent when the contract commences - so my company is following HMRC guideline precisely - that is to say, since August (when the new period of consultancy began I should not be paid T&S to go to the customer site). So the P11D is just for the T&S accrued since August (in this case circa £10K til Feb 23 2016). As for CHild Benefit - I have organised my tax affairs so that my salary sacrifice (pension) keeps my salary just below £50K. The additional 10K (which will be nearer 12K by end of FY) P11D benefit inflate my salary for FY15/16 to beyond £60K - hence the Child Benefit will be wholly repayable.
Expert:  bigduckontax replied 1 year ago.
First, sorry for the delay in response; I am a diabetic and I was having lunch. Right, now I see the exact position. You can make pension payments, including such contributions as are made by your employer, if any, up to 40K in the current tax year. You can also go back up to three years to mop up any unused contribution levels. If your cash flow can manage this it would give you a bit more leeway as pension contributions are about the only way an employed person can reduce their tax bill. Unfortunately, you appear to have been well and truly caught by Benjamin Franklin's dictum that in life there are but two certainties, death and taxes. I am so sorry that these are the few crumbs of comfort I can throw in your direction.
Customer: replied 1 year ago.
Thanks Keith. Do you think there is reasonable cause to the company to task - insomuch they have caused me (a PAYE employee) to incur this tax liability due to their mismanagement of commercial/legal/tax issues. Clearly it is unreasonable for the company to say I would not have agreed to stay on the contract if I were aware that I was going to be paying to do so. Sticking in my craw is the fact that my company knew about this, they charged the customer for this and now they want to turn it into supra-profit and stick me with the tax liability. Is this even legal? (Is there something about duty of care?)
Expert:  bigduckontax replied 1 year ago.
Whilst I do not think their actions entirely ethical and smacks of sharp practice. However I suspect that there is little that you can do about it. You could take a case to an employment tribunal, but that will be expensive and you do not receive costs in such cases, neither side does. Such an action would be for a local, trusted solicitor to advise upon. Here is ACAS general guidance of duties of care of an employer: 'Requirements under an employer's duty of care are wide-ranging and may manifest themselves in many different ways, such as. Clearly defining jobs and undertaking risk assessmentsEnsuring a safe work environmentProviding adequate training and feedback on performanceEnsuring that staff do not work excessive hoursProviding areas for rest and relaxationProtecting staff from bullying or harassment, either from colleagues or third partiesProtecting staff from discriminationProviding communication channels for employees to raise concernsConsulting employees on issues which concern them'.Apart from the last bullet point there are not any grounds here and that one is so vague I doubt if it would count in your case. Are you a member of a Trade Union? They might well be able to assist and would have considerably more clout than an individual. Please be so kind as to rate me before you leave the Just Answer site.
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.