24 Month Rule - Paying Back of Claimed Expenses

[denby]

Hi,

This is a 24 month rule question, but slightly different to what I have seen so I wanted to seek opinion based on other people's experience.

First, let me state I understand the 24 month rule in terms of what it means for claiming per location, when it is reset, etc - my question is with regards to repaying expenses (travel and subsistence) that have already been claimed. It's probably best to describe the scenario first:

I setup my own company and have been contracted to the same organisation for just over 2 years. Within that time I have had different roles (titles) and different contracts to reflect this, although the T&Cs have been the same. I have claimed some travel and subsistence in that time, but once I was aware of being offered a new contract that would take me over 24 months I have not claimed any more.

I am now looking for a new role (I'm still under contract but think it's time to move on). This may be another contract position, or it may be a permanent one. Either way, I have recently been made aware that if I have only been based at one location for my employment then choose to close my company, then I will have to repay all of these claimed expenses.

As I work in London then all of my contracts will be considered the same location, so this seems a bit restrictive to anyone working in the same city. I understand I can't claim future travel, but this means I could work for 30+ years as a contractor, with 30+ different clients, but if they are all in London then I would have to pay back the 24 months' worth of expenses that I have claimed. This doesn't seem right to me but is what I have been told.

I can look for contracts outside of London, but that means taking longer to get to a client, possibly paying more for travel, and receiving a lower day rate - none of which appeals. So other than this option, I want to explore how to avoid having to pay back the significant travel costs.

Has anyone else been made aware of, and experienced, this? I'd be interested to know what other people have done, or advice they have received. It's something new I have discovered, so any advice would be really helpful!

Thanks

A confused/concerned contractor.

[northernladyuk]

Hi,

This is a 24 month rule question, but slightly different to what I have seen so I wanted to seek opinion based on other people's experience.

First, let me state I understand the 24 month rule in terms of what it means for claiming per location, when it is reset, etc - my question is with regards to repaying expenses (travel and subsistence) that have already been claimed. It's probably best to describe the scenario first:

I setup my own company and have been contracted to the same organisation for just over 2 years. Within that time I have had different roles (titles) and different contracts to reflect this, although the T&Cs have been the same. I have claimed some travel and subsistence in that time, but once I was aware of being offered a new contract that would take me over 24 months I have not claimed any more.

I am now looking for a new role (I'm still under contract but think it's time to move on). This may be another contract position, or it may be a permanent one. Either way, I have recently been made aware that if I have only been based at one location for my employment then choose to close my company, then I will have to repay all of these claimed expenses.

As I work in London then all of my contracts will be considered the same location, so this seems a bit restrictive to anyone working in the same city. I understand I can't claim future travel, but this means I could work for 30+ years as a contractor, with 30+ different clients, but if they are all in London then I would have to pay back the 24 months' worth of expenses that I have claimed. This doesn't seem right to me but is what I have been told.

I can look for contracts outside of London, but that means taking longer to get to a client, possibly paying more for travel, and receiving a lower day rate - none of which appeals. So other than this option, I want to explore how to avoid having to pay back the significant travel costs.

Has anyone else been made aware of, and experienced, this? I'd be interested to know what other people have done, or advice they have received. It's something new I have discovered, so any advice would be really helpful!

Thanks

A confused/concerned contractor.

Who has 'made you aware'? It seems wrong from what I read.

[TheCyclingProgrammer]

Who has 'made you aware'? It seems wrong from what I read.

It sounds broadly right. If you have only worked in one location for the duration of your employment it’s considered a permanent workplace, not a temporary one.

However I disagree that the whole of London counts as a single location. London’s a big place. People often quote the square mile example from a HMRC guidance but that’s not the same as the whole of London.

When considering whether you’ve been working in the same location you should also consider your journey and the cost of that journey. A journey to one part of London could be substantially different in terms of time or cost to another part of London depending on where you’re travelling from on the first place.

[malvolio]

The quick (and very rough) test for London is if you would travel to the same mainline railway station. Coming out of Waterloo and walking south rather than north is not a different journey, having to go to Marylebone rather than Waterloo would be.

But I agree, you need two temporary locations for expenses to be claimable (which is why umbrella users can't claim anything, incidentally). If you've only ever had one then it's a BIK.

[northernladuk]

If it was your place of employment then no expenses can be claimed at all.. HTH

[northernladyuk]

It sounds broadly right. If you have only worked in one location for the duration of your employment it’s considered a permanent workplace, not a temporary one.

However I disagree that the whole of London counts as a single location. London’s a big place. People often quote the square mile example from a HMRC guidance but that’s not the same as the whole of London.

When considering whether you’ve been working in the same location you should also consider your journey and the cost of that journey. A journey to one part of London could be substantially different in terms of time or cost to another part of London depending on where you’re travelling from on the first place.

Am I reading the OP wrong? It looks to me like he has claimed <24 months (until he knew he would be there >24 months) and he is now being advised he needs to pay that back.

[northernladyuk]

The quick (and very rough) test for London is if you would travel to the same mainline railway station. Coming out of Waterloo and walking south rather than north is not a different journey, having to go to Marylebone rather than Waterloo would be.

But I agree, you need two temporary locations for expenses to be claimable (which is why umbrella users can't claim anything, incidentally). If you've only ever had one then it's a BIK.

I once did a contract for 23 months which involved driving to Coventry, getting train to Euston and getting tube North. I then got a new contract which meant walking to my local train station, getting train to Marylebone and then tube to Waterloo. I treated this as a change in location and continued claiming, although my accountant was dubious.

[denby]

Thanks all for your input. In order of responses:

1) My accountant made me aware via a 'special circumstance' note regarding the 24 month rule. In questioning them this is their response.

2) My commute to London will always be via the same station, unless a specific contract comes up that means I have to avoid the mainline station. Which could mean a long wait for a contract (that might not come up) in a different location, via a more awkward commute. I completely take the point about London and the 10 mile radius, but my commute makes that harder (although granted not impossible).

As much as I understand why they have the 24 month rule I was surprised to see this element that restricts contractors so much. I wondered if anyone else had come across it, I'm surely not the only contractor to only want to work in one city...

[eek]

I once did a contract for 23 months which involved driving to Coventry, getting train to Euston and getting tube North. I then got a new contract which meant walking to my local train station, getting train to Marylebone and then tube to Waterloo. I treated this as a change in location and continued claiming, although my accountant was dubious.

I would side with your accountant there. More than 50 miles ending eventually in the same city and the journey is the journey...

[northernladuk]

Am I reading the OP wrong? It looks to me like he has claimed <24 months (until he knew he would be there >24 months) and he is now being advised he needs to pay that back.

Because he has only had one assignment therefor it is classed as a permanent place of work so no expenses can be claimed.