Is this fraud?

[Bletchleyite]

I was on PAYE when my expenses were audited. The chances of issues with HMRC depend on who you work for. As I worked for a company that pays out 10s of £m in travel and accommodation expenses a year, HMRC always audit a few projects a year, typically those with large numbers of staff working away from home.

So they said you should have requested a tax return to declare this item?

 

[najaB]

To echo some of the comments on here - as I client I would not be happy with a consultant/contractor billing for Standard Anytime Tickets when a suitable advance was available.

It's not uncommon for standard Advance tickets to be sold out while 1st class are still available.

 

[Joe Paxton]

It's not uncommon for standard Advance tickets to be sold out while 1st class are still available.

Or, particularly on VTWC, for the cheapest Std class Advance tiers to be sold out, making a First class Advance the cheapest option - something that can be easy to miss on Atos WebTIS booking sites (leading one to book a more expensive Std Advance rather than a cheaper 1st Advance).

 

[xotGD]

Making a client or your employer pay for an anytime ticket for a journey where a cheaper Advance would have been suitable is bad form and certainly unacceptable if the motivation is to minimise the cost to oneself of changing to a First Class ticket.

Buying a standard Advance and charging for that, then upgrading to First out of your own pocket should be OK.

 

[Joe Paxton]

Making a client or your employer pay for an anytime ticket for a journey where a cheaper Advance would have been suitable is bad form and certainly unacceptable if the motivation is to minimise the cost to oneself of changing to a First Class ticket.

Though some organisations expenses claim processes still work on the basis of a railway ticketing system from the 1970s.

 

[Puffing Devil]

It's not uncommon for standard Advance tickets to be sold out while 1st class are still available.

Which is why I said "when a suitable advance is available"

Or, particularly on VTWC, for the cheapest Std class Advance tiers to be sold out, making a First class Advance the cheapest option - something that can be easy to miss on Atos WebTIS booking sites (leading one to book a more expensive Std Advance rather than a cheaper 1st Advance).

Agree - to my mind this would be an acceptable booking of 1st class and I would include the booking options screen.

Though some organisations expenses claim processes still work on the basis of a railway ticketing system from the 1970s.

That has no bearing on the creative application of expenses rules being discussed. We're in the realm of business ethics here.

 

[boxy321]

What happens if, say, Virgin standard is sold out (advances), but cheapish 1st advances are available, and London Midland standard class is still available? Do you spend the additional half hour or so leaning by the doors watching the pendos go past or upgrade?

I would absolutely record the equivalent same type standard ticket price at the time of purchase of the 1st class ticket then only claim for the former with a comment. As Bletchley said, this is very common for hotel expenditure. I once had half a dozen managers turn up at my hotel and had to pick up the bar tab for all of them as they weren't staying there.

Of course with Chiltern this is not a problem - pay the 25 quid and you're done.

The anytime vs. advance thing is a scam, end of story.

 

[xotGD]

I have heard of some employers that provide a travel allowance equal to the anytime return standard class train fare. It is then up to the individual how they choose to travel. Either splash out extra for first class or hitchhike and pocket the cash.

Similarly with an evening meal / overnight allowance.

 

[Bletchleyite]

I have heard of some employers that provide a travel allowance equal to the anytime return standard class train fare. It is then up to the individual how they choose to travel. Either splash out extra for first class or hitchhike and pocket the cash.

Similarly with an evening meal / overnight allowance.

You do seem to get that occasionally, particularly in the public sector, but it complicates the tax situation so is much less common these days. I believe it (known as a per-diem for subsistence) is very common in the US, though.

 

[talldave]

Just be grateful there's no VAT on rail tickets, that could complicate things!

Another approach is to agree an enhanced hourly rate that covers up to a certain number of trips being made. The contractor is then free to make whatever travel arrangements they like.

 

[island]

I don’t think any of this is illegal, but the client may (or indeed may not) take a dim view if he/she finds out.

 

[falcon]

Consider the following scenario:

(i) My Client is expecting me to buy rail travel and will strictly reimburse STD and not 1ST
(ii) I pay GBP 100 for a STD Anytime Return (agreed with the Client)
(iii) I then pay GBP 120 for a pair of 1ST Advance Singles
(iv) I bill the Client GBP 100 - the Client needs a receipt but not the original coupons
(v) I refund the unused STD Anytime Return and pay the fee (is it still GBP 10?), eating the fare difference myself.

Note: showing the Client the two !ST Advance Singles and then claiming for the Anytime Return is not an option.

If I do this will I have committed fraud? Obviously I will travel STD to avoid committing fraud, but I would rather travel 1ST. Any other totally legal ways around?

Many thanks in advance.

It is fraud if you feel you cannot tell your client what you have done. That is becuase you have a guilty mind. If you feel you can tell your client it is not fraud if he then say's "yes what you have done is fine by me".
So to find out if it's fraud ask your clint if it's OK with him rather than ask on forum. Look up Latin- "excaecante se Consulto"

 

[Cantab26]

Just be grateful there's no VAT on rail tickets, that could complicate things!

Unfortunately, the zero-rating of passenger transport services does not necessarily make things simpler.

For example, if I pay a rail fare to enable me to travel to a meeting and bill the cost of this to the client, I must charge standard-rate VAT in addition to the price of the ticket.

That is to say:
Price paid by me - £100
VAT paid by me - £0

Price billed to client - £100
VAT billed to client - £20

 

[Cantab26]

Consider the following scenario:

(i) My Client is expecting me to buy rail travel and will strictly reimburse STD and not 1ST
(ii) I pay GBP 100 for a STD Anytime Return (agreed with the Client)
(iii) I then pay GBP 120 for a pair of 1ST Advance Singles
(iv) I bill the Client GBP 100 - the Client needs a receipt but not the original coupons
(v) I refund the unused STD Anytime Return and pay the fee (is it still GBP 10?), eating the fare difference myself.

Note: showing the Client the two !ST Advance Singles and then claiming for the Anytime Return is not an option.

If I do this will I have committed fraud? Obviously I will travel STD to avoid committing fraud, but I would rather travel 1ST. Any other totally legal ways around?

Many thanks in advance.

It is conceptually possible for the scheme outlined above to constitute both a civil and a criminal fraud. The exact answer will depend on precisely what information the client is given as to what you are doing.

My advice would be to either:

• Buy STD Advances
• Bill these to the client
• Excess to 1ST Advances out of your own pocket
• I have always been charged a £10 admin fee for such excess fares.

OR

• Buy a STD Anytime return
• Bill this to the client
• Excess to the appropriate 1ST return out of your own pocket

As to the propriety of purchasing an Anytime fare when Advances may be suitable, this will depend on the exact circumstances of each case.

I will normally try to save my clients money when I can (e.g. using Advance fares, different routes, Off-Peak fares, &c.), unless the relevant client has a blanket 'no First Class even if cheaper' policy in which case I won't trouble myself: if clients impose such a ridiculous policy for PR reasons then the cost is obviously not their main concern and they can jolly well stump up.

 

[island]

Unfortunately, the zero-rating of passenger transport services does not necessarily make things simpler.

For example, if I pay a rail fare to enable me to travel to a meeting and bill the cost of this to the client, I must charge standard-rate VAT in addition to the price of the ticket.

That is to say:
Price paid by me - £100
VAT paid by me - £0

Price billed to client - £100
VAT billed to client - £20

The client will in most cases proceed to reclaim the £20 making it irrelevant

 

[Cantab26]

The client will in most cases proceed to reclaim the £20 making it irrelevant

See, simple.

Although in practice some clients will query the additional VAT charge because they mistakenly think that the ticket is VAT exempt.

 

[island]

It definitely isn’t exempt. It’s zero-rated.

 

[Cantab26]

It definitely isn’t exempt. It’s zero-rated.

Indeed, as I said.

 

[talldave]

I was referring to VAT on tickets which the contractor would be reclaiming from HMRC. If they were not zero rated great care would have to taken to make sure VAT on refunded tickets was never reclaimed.

 

[island]

Indeed, as I said.

Zero-rated and exempt are quite different things, but I fear we are getting off-topic.

 

[Cantab26]

It definitely isn’t exempt. It’s zero-rated.

Zero-rated and exempt are quite different things...

I have taken care to observe this particular nicety as will be seen below:

Unfortunately, the zero-rating of passenger transport services does not necessarily make things simpler.

Although in practice some clients will query the additional VAT charge because they mistakenly think that the ticket is VAT exempt.

 

[Cantab26]

To return to the original topic (and at risk of seeming most uncouth), I repeat my earlier comments:

It is conceptually possible for the scheme outlined above to constitute both a civil and a criminal fraud. The exact answer will depend on precisely what information the client is given as to what you are doing.

My advice would be to either:

• Buy STD Advances
• Bill these to the client
• Excess to 1ST Advances out of your own pocket
• I have always been charged a £10 admin fee for such excess fares.

OR

• Buy a STD Anytime return
• Bill this to the client
• Excess to the appropriate 1ST return out of your own pocket

As to the propriety of purchasing an Anytime fare when Advances may be suitable, this will depend on the exact circumstances of each case.

I will normally try to save my clients money when I can (e.g. using Advance fares, different routes, Off-Peak fares, &c.), unless the relevant client has a blanket 'no First Class even if cheaper' policy in which case I won't trouble myself: if clients impose such a ridiculous policy for PR reasons then the cost is obviously not their main concern and they can jolly well stump up.

 

[OLJR]

Thanks everybody.

To answer one key point - at the time of interest Advance fares in STD were not available on the trains I needed but 1ST Advances were. In the end we switched to another day when Advance fares both STD and 1ST were available.

I took a bit of a risk and told the Client I was going to buy 1ST Advances and bill them for STD Advances, and as it turned out they were cool on presentation of screen shots showing the fare differences.