Reply to post:

"you can drive to and from the train station and claim parking, while FTEs have to pay both out of already taxed income"

Personally, I would prefer this deduction to be allowed for all as it would make sense: it's wholy and exclusively for work purposes. However, it is different for a contractor, as the client site is not the main, permanent place of work for the contractor. If, for instance, an employee had to work at the office of one of their employer's clients for a few months, they would legitimately be allowed to claim mileage/travel expenses for that (and hotel expenses if needed).

"The flights are baked in certainty for the contractor as are the first and last week hotels - all at tax free rates, saving between 50-67% over what it'd cost the FTE. The middle week can be justified if its cheaper than returning flights, so provided he's not staying 5 star then this should be easy to justify."

If the first and last week, all week, he is actually doing training which involves him needing to be at that location then that's legit. I have known employers do this, too (and in that base the employer paid for the employee's entire holiday in doing so). A previous employer, before I went contracting, allowed any staff member who went on a business trip abroad to extend their stay, as long as they took the extra as holiday and paid the extra hotel themselves.

If it's a couple of days at the start and end, I doubt he'd be able to justify it. The cost of the hotel in between would far outweigh most flights and, even so, a tax inspector would definitely flag it as dodgy.

This assumes, of course, that he's actually doing some training. If it's all just a sham, that's fraud.

"The family going, well, you can either take the board meeting approach, or you can find courses for them too"

I agree that the training would be possible, although it would be a stretch and would likely be flagged by HMRC. The whole "trip abroad for a board meeting" thing should not be allowable for anyone, contractor or otherwise. If it is currently allowed, that loophole should be closed for everyone.

"Worst case scenario, you need flights for the family, but the mrs will be staying in your room so now you've only junior to house, if you didn't get a suite."

Any tax inspector should flag that up. If he went with the wife and 2 kids, only 25% at most should be deductible. He has gained a benefit in kind of 75% of the room costs.

"[Club membership] depends on what you do with it and with whom you do business"

No, it doesn't. Golf club and similar membership is classed as a benefit in kind, no matter who you are or what you do (with the possible exception of a golf professional). Claiming it as a business expense is fraud and tax evasion.

"if the company could send anyone along and its in the company name, then its an expense for client entertaining"

Client entertaining is not deductible for corporation tax purposes. So, even if you could convince a tax inspector that it was legit and not a benefit in kind (very difficult if only you and your family are employed), you'd still have to pay out of post-tax profits.

"as he rolls the company every 3 years anyway (capital gains disbursement rather than income you see) he's unlikley to have to repay much in the way of taxes on it, but has had about 20 years worth of Boss suits on the tax payer"

The tax man could go back 20 years and demand income tax (and any other relevant taxes) on this, as it reeks of deliberate evasion. It doesn't matter if he "rolls" the company (which, in itself, smacks of dodgy practices).

"Contractors not interested in avoiding taxes can simply pay 100% of their income out as PAYE and claim no deductions"

A contractor paying 100% PAYE will pay more tax than an FTE on the same gross (as well as not being able to run a business, pay insurances, pay an accountant). It's perfectly legit to structure a company as you wish, but only truly legitimate expenses should be claimed. There's a middle ground, not defrauding the tax man but structuring your company to pay the correct taxes. FTEs could refuse all pension, ISA, childcare etc tax breaks, if they wanted...

When it comes to expenses, ask yourself: Would an employer allow this?

If I asked an employer to get me a new, high end laptop, because my old one is old and slow and is impeding my work, it would likely be allowed. If I asked them for a new laptop, even though I never needed one because all my work was done at my desk and I had a high end desktop there, the answer would likely be no.

If I asked and employer for a 2 week training course which would improve my abilities to do my job, there's a good chance the answer would be yes. If I asked him to send me on two training courses in the Bahamas, each for 2 days, one 3 weeks after the other, and cover the hotel costs in between, the answer would probably be no.

If I asked my employer to pay for a meeting room at a hotel for a big client meeting, the answer may be yes. If I asked him to pay for my gym/golf club membership, it would be no.

There are a lot of legitimate business expenses which must be allowable for a small business. And that is what contractors are: Small businesses. Some small (and larger) business owners defraud the tax man. Many get away with it. But punishing those of us who operate their businesses legally, morally and ethically, that's wrong!