broken the 24month rule
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    Default broken the 24month rule

    Can anyone help me please - I have been contracting with my current client for 3 years of which the last 2 years i have been claiming expenses (moved home and now travel to client work place and stay in apartment during weekdays). I had believed you can claim 24 months expenses when you start claiming but now i have been told by a work collegue that it takes consideration of the whole contract length not just when you start claiming expenses.

    What penalty will i incur from HMRC? Will they look to claim back the tax from the claim expenses (19/20% of the expenses cost) only or is there more penalties on top? If more on top, what is it?

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    Quote Originally Posted by tails View Post
    Can anyone help me please - I have been contracting with my current client for 3 years of which the last 2 years i have been claiming expenses (moved home and now travel to client work place and stay in apartment during weekdays). I had believed you can claim 24 months expenses when you start claiming but now i have been told by a work collegue that it takes consideration of the whole contract length not just when you start claiming expenses.

    What penalty will i incur from HMRC? Will they look to claim back the tax from the claim expenses (19/20% of the expenses cost) only or is there more penalties on top? If more on top, what is it?
    1. Ask your accountant.
    2. My guess is that you just declare and pay BIK on your 2016/17 self-assessment. As long as you made no 'invalid' claims before 6 April 216 there shouldn't be an issue. AFAIK YourCo can pay expenses beyond the 24 month rule as long as you pay BIK.
    3. Watch out for any nuances around the child benefit income limits, if relevant.
    4. If you had any claims before April 2016, then I'm less sure. Should be manageable with professional advice.
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    Quote Originally Posted by tails View Post
    Can anyone help me please - I have been contracting with my current client for 3 years of which the last 2 years i have been claiming expenses (moved home and now travel to client work place and stay in apartment during weekdays). I had believed you can claim 24 months expenses when you start claiming but now i have been told by a work collegue that it takes consideration of the whole contract length not just when you start claiming expenses.

    What penalty will i incur from HMRC? Will they look to claim back the tax from the claim expenses (19/20% of the expenses cost) only or is there more penalties on top? If more on top, what is it?
    It's from when you know you'll go over 24 months that it kicks in.

    Chances are you'll get away with it, I've certainly never heard of anyone being caught, other's may know different though.

    Come the 22nd Nov, chances are the private sector will go like the public sector has, ie everyone caught by IR35, that's much more of a worry....

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    Quote Originally Posted by stek View Post
    Chances are you'll get away with it, I've certainly never heard of anyone being caught, other's may know different though.
    But then how many people do you know ignore the 24 month rule and claim regardless. I've not heard anyone get caught either but only know a few people that have broken it.

    For the cost I really don't think this is something that is worth taking the risk over personally. Pay it back and sleep easy.
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    Quote Originally Posted by tails View Post
    Can anyone help me please - I have been contracting with my current client for 3 years of which the last 2 years i have been claiming expenses (moved home and now travel to client work place and stay in apartment during weekdays). I had believed you can claim 24 months expenses when you start claiming but now i have been told by a work collegue that it takes consideration of the whole contract length not just when you start claiming expenses.
    Even more sweeping than that. 24 month rule is all about geographic location. The clock will take in to account other contracts before this one let alone the current contract. If you have been with this client 3 years in say, Manchester City Centre and your last gig of 2 years was also in Manchester then you can't claim a penny of the 3 years.

    As Stek says. It's when it's when you reasonably know you will be there so if you will have to stop claiming at the extension that takes you over 24 months. If you've been signing 13 month contracts then you can only actually claim 13 months and lose the next 11 because you expect to be there 25 months.

    I'm a little bemused about the 'when you started claiming' comment. Is there anything at all that works on this basis? It's either a set time or yearly (company or personal tax years). Assuming something starts when you start claiming is a bit odd.
    What penalty will i incur from HMRC? Will they look to claim back the tax from the claim expenses (19/20% of the expenses cost) only or is there more penalties on top? If more on top, what is it?
    Your accountant who has to deal with this as part of his job would be best to answer but I suspect he'll tell you it was an honest mistake so can be rectified without penalty.
    Last edited by northernladuk; 10th November 2017 at 10:06.
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    Quote Originally Posted by northernladuk View Post
    I'm a little bemused about the 'when you started claiming' comment. Is there anything at all that works on this basis? It's either a set time or yearly (company or personal tax years). Assuming something starts when you start claiming is a bit odd.
    If it is a temporary workplace that meets criteria of <24 months, and you move house after 1 year from next door to the workplace to 40 miles away, you should be able to claim from that point up until the point when you are reasonably certain that you will be at the workplace >24 months.
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    Quote Originally Posted by northernladuk View Post
    But then how many people do you know ignore the 24 month rule and claim regardless. I've not heard anyone get caught either but only know a few people that have broken it.

    For the cost I really don't think this is something that is worth taking the risk over personally. Pay it back and sleep easy.
    At one contractor-rich gig, almost everyone was doing the old start a new limited up every year to avoid the 24 month rule.

    Told them it was bollocks, no one seemed ti get caught.

    One guy did get investigated some years after, probably unrelated but it was two years of hell for him. He won though.

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    Quote Originally Posted by northernladyuk View Post
    If it is a temporary workplace that meets criteria of <24 months, and you move house after 1 year from next door to the workplace to 40 miles away, you should be able to claim from that point up until the point when you are reasonably certain that you will be at the workplace >24 months.
    But the clock is dependant on the location move.. not the time you actually put a claim in for it. E.g. Salary runs though a tax year, not from the date you actually pay yourself one etc. The time you put the claim in is rarely the time any period starts. Irrelevant point really. Just seemed odd to think like that.
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    I thought that the expenses were claimable but not tax deductible? So the company pays more CT?

    I leave it up to my accountant anyway....
    I keep pushing forwards but they keep pushing me backwards. So I have new rules. 1. Don't feed the trolls you know they have no souls. 2. Don't respond to them they'll only post back back again. 3. Don't be their friend they'll only knife you in the back. I have new rules I count them.

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    Quote Originally Posted by BrilloPad View Post
    I thought that the expenses were claimable but not tax deductible? So the company pays more CT?

    I leave it up to my accountant anyway....
    The expenses are still tax deductible for the company. They are taxable on the employee as a BIK.

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