Mileage?

[Danmal]

I've been working on a contract for the last 3 months now.

The time is split 3 days on one site which i have to drive to - it's approx 100 mile round trip, and 2 days on another site which i can take public transport to.

I have been happily claiming mileage expenses (40p a mile from my own LTD company, NOT the client) for the last 3 months but it's been brought to my attention that the revenue may not be too happy about this (ie it may be counted as a 'commuting' journey), which would be a real pain as it's costing me a fortune in petrol!

Please can someone clarify this
Thanks
Dan

[oraclesmith]

Well for this short period, it would definitely count as business mileage, in my humble opinion, providing you have established your home as your registered office. The only way it is commuting is if your client premises is regarded as your permanent place of work, which it would tend to be after 2 years.

Here is a guide :-

http://www.hmrc.gov.uk/helpsheets/490-chapter3.pdf

[dmini]

Your contract is with a limited company, unless you have a contract for over two years, you can claim.
Even if it is caught by IR35 that still applies

http://www.hmrc.gov.uk/IR35/faq_qanda/expenses_q4.htm

Hope that helps

[Mordac]

Although after 2 years you could always ask for your main base to be changed to the one which is closer. The 24 month rule applies to locations, not contracts. Thus if you move to a new client in the same location (say City of London) you are still caught by the rule, even if there is a gap.

[oraclesmith]

Wouldn't the location be a business premises address ? For example, if I were a plumber working the City, I would expect to get all my work from that area at different clients, and expect to claim business mileage.

[DaveB]

Wouldn't the location be a business premises address ? For example, if I were a plumber working the City, I would expect to get all my work from that area at different clients, and expect to claim business mileage.

Unfortunately not. For taxation purposes HMRC class the City as one location for no other reason than to stop contractors hopping between clients every two years and being able to claim expenses ad infinitum.

[oraclesmith]

Hmmm. Are there any other anomalies like that, or is it just that the City has a high concentration of contract work and good public transport ?

[Danmal]

Excellent stuff there, thanks a lot.

This was especially helpful:

"The test is whether the employee has spent, or is likely to spend, 40% or more of his or her working time at that particular workplace over a period of more than 24 months."

And this example also:

"Example
Eloise, a computer consultant, is the only employee of a company which she controls.
She is a specialist in banking systems.
She spends 18 months working full-time at the headquarters of a merchant bank Lombard Street in the City of London. She then moves next door to design a new computer system for a different bank where she expects to stay working full-time 22 months.
After that assignment she moves to work at a bank close by on Cheapside for 17 months
Eloise is not entitled to tax relief for her travel from home to these workplaces, because the nature of her work is such that she expects to work continuously in
‘Square Mile’ albeit on the premises of different banks. So her travel from home work will be broadly the same every day, year in year out (see paragraph 4.6)."

Though TBH with 4 years continuous contracts in banks in the City i don't think Eloise has to worrytoo much about claiming her tube fare!

Thanks again
Dan