However, it is different for a contractor, as the client site is not the main, permanent place of work for the contractor.
Yes it is. None of my contractors are paid to work at their home office, they're paid to work at the company office, same as the FTEs. Amazingly, only one is recognised as deductible. There's absolutely no difference. Same goes for expensing lunch and all the rest of it.
Now, if you were doing a day here, a day there at different employers you might have a point, but where you're at the same desk for 2 years you clearly don't. You do know this, of course, you just don't like it.
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.
The course could almost always be done from Grimsby as easy as Hawaii. The FTE can make no such claim against tax, and amazingly, most employers don't want to let you choose your own training course in Hawaii and then claim it back against taxes. Its a holiday. You know it. So do I.
This assumes, of course, that he's actually doing some training. If it's all just a sham, that's fraud.
It can both be training and a sham. Lets take a nice easy MCP type cert. Could be done on the train to and from work, but nope, it gets done from sunnydale because its sunny and the tax man is paying half anyway. Again, there's no possibility that you don't already know this.
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.
Yes, but that'd be the companies post tax profits, which means at 19% deductions its massively cheaper than 42%, 50%, or the top slice 67% deducted before being bought. You already know that too though, right?
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).
What do you suppose attracts the greatest number of audits, given the limited HMRC resources, trading companies, or closed companies? Yeah, so the reality is that those old Boss suits are safe as houses, and his real risk is negligible.... even if the rules don't allow it, which is far from clear given the company logo being embroidered on the sleeves.
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...
Everything you've listed is also open to contractors, just with the double dipping of moving half their life onto the corporate ticket, and then minimising their taxes aggressively using perfectly legal avoidance measures. Any you wonder why HMRC want to clamp down?
When it comes to expenses, ask yourself: Would an employer allow this?
See, you're back to the sophistry again. The employer is really the client for most contractors. You know it, I know it, HMRC knows it, and so do the public at large. The odd job man or plumber may well have a decent argument, but the IT contractor almost never does. Sorry.
You've done an admirable job of simply avoiding understanding everything you've wished to avoid understanding in order to preserve your way of thining. Unfortunately, its neither me nor you whose understanding is going to be relevant, it's HMRC and Joe Public, and as you well know, their view now much more closely aligns with mine than yours, and that's why you're getting worried.
