(Invoicing private work as business expenses!)
I have been asked by a member of The Gardeners Guild to comment on a query regarding a client who required time sheets and official invoice/claim forms to be submitted to their Account Department for work carried out in their private garden.
There are a considerable number of owners of firms, businesses and companies who are not averse to trying to put the cost of maintaining their own private gardens against their income and other business taxes as a legitimate expense. Some do this (I suspect) just to try to use any pretext to reduce their tax bill illegally, whilst others will attempt to get these costs offset by their accountants by claiming that a neat and tidy garden is vital to their companies success as they often entertain potential clients at home, and the costs of maintaining a neat and tidy garden are genuine expenses.
As contractors, we must always ensure that we are 100% open and honest in all our dealings, and even if the client insists that everything is legal and above board, we must ensure that we do not become privy to anything that could be construed as illegal. The only circumstance where I would suggest that you are safe from prosecution is if you were given a bona fide letter of confirmation from the firm’s accountant (not in-house accounts department).
Some examples I have had to deal with include a client who ordered a substantial number of mature shrubs and specimen trees to be planted at his private home address, with all tender documents and contracts clearly showing him as the client, and then attempting to pay the bill with a PLC cheque made out by a different firm altogether – one the contractor had never heard of or had any dealings with. In this instance, quite correctly, the contractor refused to accept the cheque in payment for the private works, and firmly stood their ground. They were then given a cheque in the name of the client – which promptly ‘bounced’!
The upshot of that case was that the director responsible was charged with a number of offences against The Companies Act, and no longer works for the company.
Another case involved a chap who owned a factory, and wanted to have his garden maintained by a contractor, but demanded that the invoices were to be made out to his firm, with the wording showing ‘Gardening works to factory premises’ or words to that effect. The contractor went along with this, becoming increasingly uneasy about the legality, until the inevitable happened, and the ‘Tax man’ visited the factory premises and amongst many other matters, picked up on the garden contractor’s invoices and then began a full in-depth investigation into the garden firm’s business, the result of which was bankruptcy.
To be absolutely clear; there are no half way grey areas here. A private client can insist that you submit a time sheet of your hours worked, and operations carried out. He can then have those time sheets checked out and recorded by his business office. How he conducts his affairs, and his relationship between his contractor and his business is not an issue. It is entirely up to the contractor to submit to his regime – or refuse to work on those terms.
What is not acceptable is for the contractor to submit paperwork made out in the name of one person, and accept payments from a third party without good cause and clear direction, an example of which would be a gift from a family member (picking up the bill for works to Gran’s garden).
If you are ever given a cheque paid against an invoice made out to one named person, the cheque being in another (business name, especially Limited Companies, LLPs or PLCs,) if you do decide to accept it, make sure you photocopy the cheque and keep that copy in your records as an insurance against future questions. It is quite unreasonable to expect a small gardening operation to turn down payment because of a doubt – if the cheque clears, that’s all that matters!
But do protect yourself, and never allow anyone to dictate potentially illegal terms. Always remember – we are CONTRACTORS. We should work under clear and concise quotations otherwise we are wide open to being involved in creative accounting by unscrupulous employers.