Compliance chat

Mileage expense for trampers and workers at long term placements

Partners will be using their own vehicle to get to a place of work. Often this can be multiple places of work in one week or 1 place of work over longer periods. The key point is that the vehicle is not being used to carry out the contract for delivery purposes in this instance and therefore;

it is acceptable to claim the recommended normal HMRC mileage i.e. £0.45 per mile for maintenance and fair wear and tear up to 10,000 miles and £0.25 per mile thereafter.
Under no circumstances are the partners able to claim for the route mileage of their delivery vehicle.

Flat Rate VAT and the notification to the worker of the setup of the scheme and their possible exposure to any reclaim, etc.

The Limited Liability Partnerships are VAT registered. The VAT returns are completed by PDL, submitted quarterly and paid accordingly. The LLP is classed as its own entity and the Partners liability as such is limited to their capital investment. In the partners case it would be £0.00 as they are paid Net, minus expenses claimed, leaving only PAYE to be paid to HMRC on a monthly basis.

60% income and IR35 implications as defined by HMRC

A Limited Liability Partnership (LLP) is very similar to a limited company except that it requires two members. Unlike a limited company where the director is able to pay themselves a small or no salary and draw the rest as dividends, a partnership’s members are taxed as employees of their business. IR35 is therefore irrelevant in most cases as full income tax and NICs will already have been made. But there are occasions where the IR35 legislation may apply to partnerships:

If the worker owns 60% or more of the profits (either alone or with relatives)
The majority of the partnership’s profits stem from a single client or their associates
The income of a partner is based on the income generated by that partner under the partnership’s arrangements for sharing profits

The partnership would need to satisfy only one of the above, plus the usual conditions of deciding whether the legislation applies would also need to be met for the legislation to apply.

Source

The LLP does NOT satisfy any of the three criteria aforementioned and would therefore fall outside IR-35.

Indemnity, is it insurance backed? And if so, by whom?

PDL will provide a warranty:
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"The Supplier warrants and undertakes to the Customer in relation to the provision of the Services that it will pay to HM Revenue and Customs all payment and liabilities which may be due and owing to it by the Drivers and/or any LLP of which they may be a member."

PDL can also supply and are happy to sign a Road Haulage Association (RHA) Indemnity letter in order to satisfy any concern clients have with regards to the LLP’s paying tax on the Partners behalf. The indemnity letter is not insured but is supplied and guaranteed by the RHA. PDL provides a warranty in the Contract for Payment Services (Clause 6.3), which provides security for the customer. If the warranty is invalidated or breached the customer can begin legal action against PDL.

How do you claim the NI allowance with only 1 worker/director?

There is more than one partner in the LLP however if partners leave and only one remains, the partner is not a director and therefore does not satisfy both criteria:

One employee paid above the Class 1 National Insurance secondary threshold and;
the partner is also a director of the LLP

Concern about being seen as an MSC.

PDL is not a Managed Service Company (MSC). To summarise; you would enter into an agreement with said LLP and the members of that LLP would carry out the contract according to its terms stipulated by the customer. The LLP is its own entity. PDL provides a payment solution for the LLP and its members, but does not make contractors non director shareholders, nor does it pay low salaries and dividends in order to avoid paying large amounts of income tax and national insurance. PAYE is paid in full by each partner of the LLP, however each partner is entitled to claim partnership expenses (HMRC recognised) in order to off-set their contributions.