Mileage and 24 month rule

[ChimpMaster]

<snip>
You can change job title, contract, agent, terms, client, building and street every week and still fall foul of the 24 month rule. You would still be "JoeJurcich, employee of JJSoft LtdCo, who works in the City".

So you can change who you work for, i.e. close your Ltd and join an Umbrella and then claim expenses as an employee of that Umbrella.

Several months/years later, start up a Ltd and start claiming expenses as an employee of the Ltd.

It all depends on where your risk threshold lies and how important travel expenses are to you. How far do you want to push it? How far can you reasonably justify it? Is it really worth it trying to squeeze those last few pounds out of your contract?

[malvolio]

So you can change who you work for, i.e. close your Ltd and join an Umbrella and then claim expenses as an employee of that Umbrella.

Several months/years later, start up a Ltd and start claiming expenses as an employee of the Ltd.

It all depends on where your risk threshold lies and how important travel expenses are to you. How far do you want to push it? How far can you reasonably justify it? Is it really worth it trying to squeeze those last few pounds out of your contract?

That won't work and is simple evasion. I'll leave you to work out why, but as a hint, legally You and YourCo are two different people.

[Scrag Meister]

ME
"Need some clarification.

I have just moved with my end-client of 5-6 months out to Canary Wharf from St Pauls in the City.

I had previously been working for another bank in the City so stopped claiming expenses back in 2009.

Can I start claiming travel expenses again, now that I am in a different location and within the 2 years with the current client?

A grey area. "

ACCOUNTANT
"As you have moved location, you are allowed to claim on expenses.

This is presuming that you will not be at this location for more than 24 months."


Are they liable if wrong?

[ChimpMaster]

That won't work and is simple evasion. I'll leave you to work out why, but as a hint, legally You and YourCo are two different people.

When I set up my Ltd (after a couple of years with an umbrella) my accountant advised that the 24 month rule would reset from that point onwards, i.e. I could claim travel expenses again.

I understand your point but do you have a link which shows whether the rule applies to the individual alone, or to the individual as an employee of a specific company?

EDIT: Actually no need to post links, I was just being lackadaisical.

[LisaContractorUmbrella]

To clarify - courtesy of our friends at HMR&C:

Section 339(5) and (6) ITEPA 2003
As explained in EIM32075, a workplace that an employee attends for the purpose of performing a task of limited duration or for some other temporary purpose is a temporary workplace. But there is a further rule that prevents a workplace from being a temporary workplace where an employee attends it in the course of a period of continuous work that lasts, or is likely to last, more than 24 months. Where this further rule applies the workplace will be a permanent workplace. This rule does not apply unless the workplace is capable of being a temporary workplace as defined by S339(3) ITEPA 2003.

A period of continuous work is defined by Section 339(6) ITEPA 2003 as a period over which the duties of the employment are performed to a significant extent at that place. To apply this rule you should treat duties as performed to a significant extent at any workplace if the employee spends 40% or more of his or her working time at that place. The effect of this rule is illustrated by examples beginning with example EIM32086. The effect of this rule for part-time workers is illustrated by example EIM32092. Breaks in attendance are considered at EIM32105.

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 that lasts, or is likely to last, more than 24 months. Where that is the case the workplace is not a temporary workplace and so it is a permanent workplace. Travel between that place and home will be ordinary commuting and so is not deductible.

This rule is modified where the employee works at a succession of workplaces but the change of workplace has no substantial effect on the employee's journey to work. All such workplaces are treated as the same workplace for the purpose of the legislation, see EIM32280and example EIM32089.
The legislation is written in terms of the length of time that it is reasonable to assume, or is likely, that the employee will spend at that workplace. The effect of the rule is not altered where the expectation does not match the outcome, see example EIM32083. The effect of the rule can be altered when there is a change of expectation, see example EIM32084. EIM32100contains advice on how to find out what expectation the employee may have.

Remember that the 40%/24 month rule is only a rule that treats workplaces that would otherwise be temporary workplaces as permanent workplaces. It does not apply to a workplace that is not a temporary workplace because it does not meet the definition in EIM32075. This is illustrated by example EIM32087. Even though the employee in that example works in Dolgellau for only 20% of her time it is not a temporary workplace because she does not work there for a limited duration or for a temporary purpose.

When considering whether a workplace is a temporary workplace, you should also consider the other tests listed at EIM32075

EIM32080 - Travel expenses: travel for necessary attendance: definitions: temporary workplace: limited duration, the 24 month rule

[northernladuk]

You would think that kinda cover it all but I am sure will raise questions in peoples attempt to avoid the rule.
I remember a question about working in the other direction makes the first place of work far enough away. eg. I travel 1 hour to work going south, if I travel an hour going north that is 2 hour difference. Surely that would reset the clock. According to the statement that Lisa has just given then no it won't. The journey is exactly the same.

This is a really interesting situation as we haven't had this particular line put to is. Certainly puts me in trouble as I am in a similiar situation to the north south situation as mentioned above. I thought 140 mile difference would be enough but according to this it isnt.

Also what happens if I am spending 1 hour to commute to work. next gig is only 30 mins. Is that substantially different (I would say no at a guess) and what if it is infact closer?

Very interesting post Lisa.

[LisaContractorUmbrella]

You would think that kinda cover it all but I am sure will raise questions in peoples attempt to avoid the rule.
I remember a question about working in the other direction makes the first place of work far enough away. eg. I travel 1 hour to work going south, if I travel an hour going north that is 2 hour difference. Surely that would reset the clock. According to the statement that Lisa has just given then no it won't. The journey is exactly the same.

This is a really interesting situation as we haven't had this particular line put to is. Certainly puts me in trouble as I am in a similiar situation to the north south situation as mentioned above. I thought 140 mile difference would be enough but according to this it isnt.

Also what happens if I am spending 1 hour to commute to work. next gig is only 30 mins. Is that substantially different (I would say no at a guess) and what if it is infact closer?

Very interesting post Lisa.

Thanks NLUK You have highlighted the problem exactly - what is substantially different? You also have to remember that the 40% rule also applies the the 24 month rule - once you factor that in and apply it to all the contracts you've had over the last few years it makes the mind boggle. We have invested a huge amount in systems that make sure that none of our employees breach the rules but it really is mind-bendingly complicated

[ChimpMaster]

Lisa

Thanks for the info. It doesn't mention anything about change of employers though (or did I miss that point?) and whether this would impact the 24 month rule.

Do you think the 40% rule could apply in this situation:

On-site Working hours are 35 per week.

24/7 support is part of the role, i.e. must be available on phone at any time when not in the office.

Travel time is approx. 15 hours a week.

Ltd Co admin/accounts/entertaining/contract hunting/etc time is approx 4 hours a week.

[LisaContractorUmbrella]

Lisa

Thanks for the info. It doesn't mention anything about change of employers though (or did I miss that point?) and whether this would impact the 24 month rule.

Do you think the 40% rule could apply in this situation:

On-site Working hours are 35 per week.

24/7 support is part of the role, i.e. must be available on phone at any time when not in the office.

Travel time is approx. 15 hours a week.

Ltd Co admin/accounts/entertaining/contract hunting/etc time is approx 4 hours a week.

Yes it could because the 24 month rule and therefore the 40% rule both apply to location. Your temporary location (24 month rule only applicable to temporary workplaces) is On-Site - if you have a 12 month contract then a 4 month break somewhere else and then a second 18 month contract at the original location the 24 month and 40% rules would apply.

[northernladuk]

Lisa

Thanks for the info. It doesn't mention anything about change of employers though (or did I miss that point?) and whether this would impact the 24 month rule.

Do you think the 40% rule could apply in this situation:

On-site Working hours are 35 per week.

24/7 support is part of the role, i.e. must be available on phone at any time when not in the office.

Travel time is approx. 15 hours a week.

Ltd Co admin/accounts/entertaining/contract hunting/etc time is approx 4 hours a week.

As clearly pointed out earlier you have not changed employers. Your Ltd is your employer. All you are changing is your client and working location. You do 35 hours a week on site. How can you justify the 40% rules there? People need to get a grasp of this stuff and understand it. Not try and come up with fly by night excuses to convince yourself you are out. Some of it is common sense really.

I don't think Lisa understood the example. Chimp is trying to say because he is on call he counts that as time away from work so making it look like the 35 hours is part of the working day. I would not count oncall as part of the working day.