Friend is committing tax fraud and thinks its legal

[DyslexicScientist]

She works as an estate agent and reading some sites thought that she could get a tax rebate for her travel card and uniform.

I did laugh at her, as clearly its in breach of the rules. She only very occasionally uses the travel card for work and doesn't cost her any extra money on top of the card she buys to travel into work / uses fo r leisure. She interpreted the rules very differently and claimed as if the full amount was all for work usage.

Also she claimed a uniform allowance , even though she doesn't have a uniform and just wears normal clothes. So this isn't allowed either.

To my shock hmrc have just approved it and given her almost £2000 back. I guess it wasnt looked at in any detail as for them its a small amount.

Firstly I'm worried that it will come back to bite her if they find out it isn't kosha. Secondly that is a lot of money she's got back, that she shouldn't be entitled into.

She's just dismissed my concerns saying they've approved it. When i doubt theyvhave, they've just taken her word and trusted what she said.

Wwyd? Back off or try to get her to speak toban accountant?

I would just mmob.

No one can comment on this until they know if she is self employed or employed.Some estate agents are self employed and only paid commission. The tax regime for expenses claims is very very different and the test is depending on whether she is employed or self employed. Does she have tax taken off at source under PAYE?

jay I just have a vision of you on your own in a home office, wearing a silly hat, with a little Christmas dinner in front of you, looking around forlornly for someone to pull a Christmas cracker with.

The poster upthread is correct. An estate agent cannot claim clothes as an allowable expense for tax purposes under any circumstances. There is a famous tax law case where a barrister tried to claim for her work clothes.

She may be able to claim for the cost of journeys if she is self employed. It really depends on all the circumstances and if she is based at an office she cannot claim the cost of the journeys to work.

I think HMRC get something like 10 million SA tax returns a year, so they don't check each one. They all go into a system for risk assessment. It may flag up now or somewhere down the line but it is likely she will be caught out eventually and have to pay the money back with interest and penalties.

If HMRC investigate then she's in the shit. Re the clothes - we're not talking hard hats and overalls here - it's stuff that can be worn out of work.
The travel - she possibly has a case if she's self employed. Until April anyway.

It doesn't matter if you are employed or self-employed, you can't claim for "everyday clothing" even if you wear it for work. Uniforms, protective clothing and costumes (for actors) can be claimed for.

I find it hard to believe she got as much as 2k. The dental nurses where I work have just put their claims in and got about £200

WWID?

Nothing.

If she wears designer clothes etc then I can see how she got a deduction of £2k

Most people in a customer-facing role have to wear appropriate clothes for work, but you can't just claim for them unless (as others have said) they have a logo or are a uniform/specific to the particular job or a health & safety requirement like steel toe-capped boots and high vis jackets for instance. You can't really claim for a city suit or smart outfit!

You can claim though, for clothing damaged while at work (ie ripped on an open filing cabinet drawer or whatever).

You can't claim for travelling to and from your normal place of work either, so she's definitely made a 'mistake' there, as well as with the clothes.

I guess if you're self employed you could stretch it by saying your usual place of work is in your home office, so going into the office could count as business travel?

The claim can be backdated my DH did it when he was a mechanic.

Also PAYE people can claim it, it changes your yearly allowance code thingmy

Damn I wish I'd known that about clothing damaged at work. DH slung his lovely designer wool overcoat over the back of a chair in a restaurant and it got scorched to buggery against their heater. He was lunching some clients and trying to close a deal at the time so he didn't kick off with the restaurant, in front of them. Gorgeous coat he bought to last him a lifetime.

Gosh I'd have though a barrister would be able to claim. You don't have much call for black suits other than in court, do you.

But how much would you allow? It would end up being too much of a loophole.

And you could wear it to a funeral!

But Vestal, anyone who works in an office or even a school, can say that.

Barristers can claim for wigs and gowns etc (not much call for those outside court) and for dry cleaning. They can claim the VAT back on a couple of suits each year though.

Yes I thought about funerals as I typed that!
I suppose I just thought - you wouldn't buy them (all!) if you weren't a barrister, so I thought they would be allowable expenses, even if only a percentage of the cost.

I have the leaflet she used in front of me : one of my clients brought it round.

Online Tax Rebates Limited

William Churchill, Senior Tax Expert, Uniform Tax Rebate
has used the ICAEW Logo

I suspect that in a couple of years a lot of people are going to get a VERY nasty shock when HMRC unpick it.

if anyone reading this thread has a genuine claim they should avoid paying commission to dodgy agents and claim via HMRC form p87 if employed or their tax return if self employed. The test is normally interpreted as wholly and exclusively for work - ie a barrister wears a black suit for court but also for warmth and decency so can't claim. Protective clothing, overalls etc is ok.

Anne Mallalieu
such an awful person to have set that ultra important piece of case law

Something doesn't sound right here. The tax free allowance for cleaning your uniform equals less than £20 a year extra in your hand.

I'm not sure about the travel pass thing, but £2000, back as a tax break???

Sorry I don't believe it for one second.

She is a permanent employee who is paid by PAYE. Commision isbpaid though PAYE.

It was serval years backdated.

The uniform was only a tiny amount of the rebate, the vast majority was the travel card.

It sounds more than possible she got £2000 back.
Many companies who pay a self employed sub contractor will discount tax from your invoice before paying you. So the first (i estimate) £9000ish people have before they are taxed is something these people do not benefit from until they claim it back from the taxman. 20% of £9000 is £1800 before you've already started.

Then if there are travel expenses, Protective equipment, new tools, training, business insurance. Personal accident insurance, work phone, cost for a laptop and printer for invoices.

People put in for much, much higher rebates than £2000.

The rule for employees is that the expenses are wholly,exclusively and necessary for work.Clearly they are not but really you need to MYOB