2 year rule versus limited company

[jimeller]

have a question regarding the 2 year rule on expense claims. right, here we go...

i have worked for the client since june 26th 2006, through an agency but using an umbrella (parasol) for taxation and payment. I have been claiming travel, subsistence and general expenses from the beginning as i live 160 miles from the workplace. My contract is renewed every 3 months and it seems i will be working there for quite a while to come.

Parasol have now told me that i am in breach of the 2 year rule and therefore cannot claim the expenses i have been claiming. This is obviously a problem for me as these are my biggest expenses whilst working there. I travel home every weekend.

After asking around at work, it seems that people who have their own limited company can get round this issue (don't ask how...), so my question is, is this correct?? Does this rule apply to limited companies?? if so, how can i get round it?? I don't want to leave my job, but i can't see another way round this.


Thanks for any input in advance.

[DiscoStu]

Originally Posted by jimeller

After asking around at work, it seems that people who have their own limited company can get round this issue (don't ask how...), so my question is, is this correct??

No

Originally Posted by jimeller

Does this rule apply to limited companies??

Yes

Originally Posted by jimeller

if so, how can i get round it??

Find a new gig in a different place

Originally Posted by jimeller

I don't want to leave my job, but i can't see another way round this.

It's not your job, it's a contract

HTH

[TheBigYinJames]

Originally Posted by jimeller

After asking around at work, it seems that people who have their own limited company can get round this issue (don't ask how...), so my question is, is this correct?? Does this rule apply to limited companies?? if so, how can i get round it?? I don't want to leave my job, but i can't see another way round this.
Thanks for any input in advance.

Yes it applies to limited companies, to anyone claiming a business related expenses. They can't get around it except by cheating.

If youw ork at the same site for longer than 2 years (or know before the two years are up that you WILL be working there longer than 2 years) then you must stop claiming site based allowances.

[ASB]

You can "get around it" by simply continuing to claim the expenses. However your umbrella won't let you (rightly). All your mates who do this may be in for a bit of a shock should they get an investigation.

The only real way around it is to ensure it remains a temporary workplace. To do this spend less than 40% of your time there.

[Crossroads]

Is there not an argument that:

1. You sign up to use a brolly for a specific contract.
2. You only use the brolly for that contract.
3. Therefore the workplace is not temporary.
4. You cannot claim travel expenses at all.

Obviously the solution is to use the same brolly for multiple locations over a period of time.

[TheBigYinJames]

Originally Posted by Crossroads

Obviously the solution is to use the same brolly for multiple locations over a period of time.

Which is what I do, but the brolly is irrelevant to the 2 year rule. Ltd or brolly, if you work longer than 24 months at a particular site, or know you are going to work longer than 24 months at that site, you have to stop clamining site based allowances.

[jimeller]

ok guys, thanks for the response.

however, i may need to word this slightly different than before.

if i use a brolly company for 2 years, then start a ltd co, with a new contract (albeit the same terms and workplace), are my expenses counted against the new Ltd Co, as opposed to myself (whilst under the brolly)???

[LisaContractorUmbrella]

Before anyone suggests it - changing brollies won't help either - 24 month rule applies to the place of work only

[Integrity]

Originally Posted by ASB

You can "get around it" by simply continuing to claim the expenses. Howeve your umbrella won't let you (rightly). All you mates who do this may be in for a bit of a shock should they get an investigation.

The only real way around it is to ensure it remains a temporary workplace. To do this spend less than 40% of your time there.

It is worth noting (Ltd Companies Only) that the 40% doesn't only include time that is billable to clients, but all work done within the business, such as travel to clients, marketing, product development activities, accountancy, meetings with suppliers etc. the list goes on.

It isn't easy to make this fit with a single project taking up 40 hours per week (in fact close to impossible). It would be necessary to prove that a 101 hour week is being done. If 3 or 4 days were spent on a client site 1 or 2 days at your own office that are client paid, plus evening work on other projects, it is possible to get the weekly time below 40%.

To prove this, it might be necessary to have your own personal worksheets with your own Ltd company to record hours and attribute them to individual parts of the business.

[ASB]

Originally Posted by Integrity

It is worth noting (Ltd Companies Only) that the 40% doesn't only include time that is billable to clients, but all work done within the business, such as travel to clients, marketing, product development activities, accountancy, meetings with suppliers etc. the list goes on.

It isn't easy to make this fit with a single project taking up 40 hours per week (in fact close to impossible). It would be necessary to prove that a 101 hour week is being done. If 3 or 4 days were spent on a client site 1 or 2 days at your own office that are client paid, plus evening work on other projects, it is possible to get the weekly time below 40%.

To prove this, it might be necessary to have your own personal worksheets with your own Ltd company to record hours and attribute them to individual parts of the business.

There is another possible get out. If one has multiple clients and does "substantive work" at the home base they may be an argument that it remains a temporary workplace.

(FWIW when I was investigated some years ago I had claimed expense for well over 2 years of pretty constant visits to the same site and the inspector didn't complain. He accepted that home was my office and everything was chargeable. I think there might have been a case around then (hindmarch?) which 'hardened attitudes and I suspect that today he would take a different view).