Expenses travel for 6 month contract - Wrong advice from HMRC helpline?

[MarkTaylor]

I believe I have been provided incorrect advice from the HMRC helpline regarding travel to client site.

For context; I'm a contractor running through my own limited company. My contract is via an agency - the agency then has a contract with the client. The contract seems a fairly standard "contracting" contract to me - the initial period was for 6 months - but could have been terminated with 2 weeks notice. I was brought into manage a team when their previous manager left - thus I've treated this as an Interim role, thus within IR35. I was expecting one of my roles was to recruit my permanent replacement - but that hasn't happened (yet) - but I'd expected to end the contract early (which it didn't - I've actually renewed for another 6 months).

(Please note that I'm talking last tax year - I know that this new tax year I lose the tax relief)

My understanding was that even though I was on the client site 100% of the contract it was still treated as a temporary workplace - as such travel expenses would be entitles to tax relief. HMRC helpline says they they should have been payrolled (thus attracting PAYE/ NIC).

The HMRC helpline cited Clause 3.28 - Fixed term term appointment from the 490 Guide. Their argument was that because a contract was in place then it fell under this clause.

I've previously discounted this rule as it uses the terms "Appointment" and "Employment". At no point has there been a contract of employment

Rather, I've always interpreted as being a temporary workplace based on clause 3.14 and the example in 3.25 which seems to match how I'm operating.

My understanding seems to be correct when I look at previous contracts & accountant advice. Also why introduce the new travel & subsistence rules if the old rules already covered it?

This feels as if the helpline just gave me the wrong advice.

Does anyone have advice on this?

[mudskipper]

I believe I have been provided incorrect advice from the HMRC helpline regarding travel to client site.

For context; I'm a contractor running through my own limited company. My contract is via an agency - the agency then has a contract with the client. The contract seems a fairly standard "contracting" contract to me - the initial period was for 6 months - but could have been terminated with 2 weeks notice. I was brought into manage a team when their previous manager left - thus I've treated this as an Interim role, thus within IR35. I was expecting one of my roles was to recruit my permanent replacement - but that hasn't happened (yet) - but I'd expected to end the contract early (which it didn't - I've actually renewed for another 6 months).

(Please note that I'm talking last tax year - I know that this new tax year I lose the tax relief)

My understanding was that even though I was on the client site 100% of the contract it was still treated as a temporary workplace - as such travel expenses would be entitles to tax relief. HMRC helpline says they they should have been payrolled (thus attracting PAYE/ NIC).

The HMRC helpline cited Clause 3.28 - Fixed term term appointment from the 490 Guide. Their argument was that because a contract was in place then it fell under this clause.

I've previously discounted this rule as it uses the terms "Appointment" and "Employment". At no point has there been a contract of employment

Rather, I've always interpreted as being a temporary workplace based on clause 3.14 and the example in 3.25 which seems to match how I'm operating.

My understanding seems to be correct when I look at previous contracts & accountant advice. Also why introduce the new travel & subsistence rules if the old rules already covered it?

This feels as if the helpline just gave me the wrong advice.

Does anyone have advice on this?

Your interpretation seems correct to me. Do you have an accountant? What is their view?

[SueEllen]

Don't rely on HMRC helpline to give you the correct advice.

You need to use your own accountant.

Simply because if needs be you can send your accountant the contact to read there as the HMRC helpline people can't see your contract.

[MarkTaylor]

Your interpretation seems correct to me. Do you have an accountant? What is their view?

I'm currently "between accountants".

I took on the minimal duties myself when it was perm for 3 years. Plus I'm a control freak and a cheapskate.

Being serious, I've found that doing it myself gives me a much better idea of what is happening - something my previous accountant kept me arms length from which never felt good.

[SueEllen]

I'm currently "between accountants".

I took on the minimal duties myself when it was perm for 3 years. Plus I'm a control freak and a cheapskate.

Being serious, I've found that doing it myself gives me a much better idea of what is happening - something my previous accountant kept me arms length from which never felt good.

You need to choose an accountant that does the amount for you which suits your needs.

There are lots out there and some are happy for you to do most of your company stuff but for you to ask the odd difficult question now and then. That way when one of the customers they are more involved in asks the same question they can answer it quickly.

[MarkTaylor]

You need to choose an accountant that does the amount for you which suits your needs.

There are lots out there and some are happy for you to do most of your company stuff but for you to ask the odd difficult question now and then. That way when one of the customers they are more involved in asks the same question they can answer it quickly.

Would you have any recommendations for accountants that work on a per question basis?

Have a look through the forum, most of the recommendations seem to be for full service accountants

[LondonManc]

I'm currently "between accountants".

I took on the minimal duties myself when it was perm for 3 years. Plus I'm a control freak and a cheapskate.

Being serious, I've found that doing it myself gives me a much better idea of what is happening - something my previous accountant kept me arms length from which never felt good.

As illogical as it may seem now, it's cheaper to have an accountant.

[TykeMerc]

An important point to note is that while the Inland Revenue and Customs departments used to be relatively impartial and only interested in applying the legislation relevant to their teams in a fairly straight forwards manner, that is no longer the case and the change is very much for the worst.

They're now "results" driven and have a clear agenda to collect as much tax as they can for the minimum effort, that includes giving dodgy "advice" and applying bully boy, strongarm tactics to small targets. Taking on large corporations with expensive advisers is slow, difficult and relatively ineffective.

Treat anything you hear from HMRC as factually inaccurate unless you know for certain it's true.

[Lance]

Your interpretation seems correct to me. Do you have an accountant? What is their view?

I was sure that the new rules that came in earlier this month are quite clear that if you're inside IR35 then you can't claim expenses. This is what is unfair as IR35 contractors are less able to claim tax relief on expenses than full-on permies.

[mudskipper]

I was sure that the new rules that came in earlier this month are quite clear that if you're inside IR35 then you can't claim expenses. This is what is unfair as IR35 contractors are less able to claim tax relief on expenses than full-on permies.

Yes, OP is talking about expenses prior to April.

Inside IR35 you can still claim expenses other than normal commuting - so you can claim the expenses that permies can claim, if, for example, your client sends you to a different site.