Clarification on "2 year rule"

[sanchez1978]

Hi guys, Would anyone be able to clarify my situation. Been doing some reading up and its left me a bit confused..

Does starting a NEW contract after a two month career break reset the two year rule? i.e Working for a client, take a break and start a brand NEW fresh contract with the same client.

Any help will be greatly appreciated!! Sorry if this has been already asked but I couldn't find anything specific to this situation.

[NotAllThere]

It doesn't necessarily reset, there's complexity about the percentage time spent elsewhere.

[sanchez1978]

It doesn't necessarily reset, there's complexity about the percentage time spent elsewhere.

Many thanks for your response. It does seem to be a grey area and its hard to find a definitive answer even on the HMRC website. Might have to seek professional advice on this one..!!

[controlbox]

How about accomodation?

I'm assuming hotel/B&B/rent is treated the same as travel expenses??
I live in the midlands but rent a room in London while I'm working down here.
It isn't practical to relocate the whole family to london, so my room is always an added expense (£800/month) which i currently claim back from my ltd.

[NotAllThere]

Travel and subsistence. B&B is subsistence.

[deckster]

I'm assuming hotel/B&B/rent is treated the same as travel expenses??
I live in the midlands but rent a room in London while I'm working down here.
It isn't practical to relocate the whole family to london, so my room is always an added expense (£800/month) which i currently claim back from my ltd.

Yes, generally this will be allowable but you need to be careful that it is 100% business use. If you ever stay over for the weekend, or let friends/family use it etc. etc. then HMRC will claim that it's not entirely business use and will only allow a %age of the full amount.

Assuming you tell them of course

[Beefy198]

I'm assuming hotel/B&B/rent is treated the same as travel expenses??
I live in the midlands but rent a room in London while I'm working down here.
It isn't practical to relocate the whole family to london, so my room is always an added expense (£800/month) which i currently claim back from my ltd.

If you've been on a contract for two years you're basically a permie.... and a permanent employee wouldn't get a tax break on a second property, would they?

So does anyone know for sure if you can continue to claim accomodation costs?

[deckster]

If you've been on a contract for two years you're basically a permie.... and a permanent employee wouldn't get a tax break on a second property, would they?

So does anyone know for sure if you can continue to claim accomodation costs?

The post you quoted doesn't mention length of contract so it may not be relevant - but of course you're right, if the engagement is (or is expected to be) more than 2 years then absolutely travelling and subsistence expenses are not allowable.

[TheFaQQer]

The post you quoted doesn't mention length of contract so it may not be relevant - but of course you're right, if the engagement is (or is expected to be) more than 2 years then absolutely travelling and subsistence expenses are not allowable.

It's not even down to the contract - it's the location that counts.

Three x 9 monthers in the same place => can't claim for any of the last one...

[Bob Jones]

According to Bob Jones the Taxation expert on shout99 website, the difference between sites has to be viewed in context of the whole journey. So if you were travelling to London from Scotland then whether you go 10 miles east or 10 miles west at the end of a 300 mile journey would make little difference to the journey itself. If you were only doing a 15 mile journey it would.

There is a post here going in to this further:

http://www.shout99.com/contractors/s...le.pl?id=46521

It isn't very often I find time to look at the threads let alone add my views - but thanks for linking the answer that I provided on Shout99. You cannot simply leave a site, return some time later, and start a new 24 month period unless the gap is 24 months - anything less MIGHT be ok but you are into a mathematical calculation. I used to have a website www.travel-expenses.info - but this has now been incorporated within the members area of Contractor Alliance - there is one Umbrella who used to use my site in preference to HMRC. I agree this is a grey area- I agree it is nuts - some aspects are unworkable, particulary when it is obvious from the replies on this site that you guys have a better knowledge of the expense rules than the shop floor of HMRC - most of the answers given I can agree with - one or two I am afraid I can't agree. All the answers to all scenarios are within the Contractor Alliance site. For those who don't know my history is 39 years service with IR/HMRC latterly specialising in travel expenses and full time representing HMRC at Commissioners meetings. Only today I have had HMRC drop yet another case - this one is a 24 month rule and went as far as the Appeals Unit. The trouble is they will not agree that I am right - they will only agree not to take the case any further - and it has taken over two years to reach this point. I am in the process of writing some articles on latest developments on various aspects of travel expenses but Helen may consider limiting the publication to within the Contractor Alliance site so they may not be generally available. The various alternatives are too involved to include here but if anyone wants specific professional advice then by all means email me at bob.jones25@btinternet.com. www.internet-taxation.co.uk