Clarification on "2 year rule"

[cojak]

No it isn't, as it can be considered to be in the same geographic location.

Actually, on reflection what do you mean by a 'restart'?

If you mean 'reset the expenses clock back to zero' then no.

[LisaContractorUmbrella]

With trepidation;

I completed a contract in Dec 09 based in one building of a company.
Later, I was interviewed for an entirely different contract, with different managers/clients and in a different building - but the same town and same company. I started late Jan 10.

Is that a restart?

That would be a continuation of your contract that ended Dec 09 as there is no significant difference in the travel

[DrEvil]

Yup. That looks more like you have worked AWAY from your NORMAL place of work for 6 months so your stuffed. Always remember why the rule is there. It is a period of time that HMRC deem it long enough for you to work without reasonable considering relocation. To do 18 months in north, 6 months south and then back to north makes it look like that area is your normal place of work and would expect you to make the effort to relocate to that area and stop claiming expenses.

Hmm. this has got me worrying about my situation now and would like some advice please.

My home is in Nottingham and from Sep-07 until Nov -08 I worked for a client in Leeds.
Jan-09 to Jan-10 for a client in Birmingham.
Feb-10 onwards I'm back at the client in Leeds.

Will HMRC regard my current engagement with the client as a continuation of the original contract rather than resetting the clock back to zero ?

Thanks in advance.

[Brussels Slumdog]

Back and forth

Yup. That looks more like you have worked AWAY from your NORMAL place of work for 6 months so your stuffed. Always remember why the rule is there. It is a period of time that HMRC deem it long enough for you to work without reasonable considering relocation. To do 18 months in north, 6 months south and then back to north makes it look like that area is your normal place of work and would expect you to make the effort to relocate to that area and stop claiming expenses.

Reallocate up North, forfet the expenses for a few months ,quit the job,then get a contract back south and claim expenses working where you used to live!

[lje]

Hmm. this has got me worrying about my situation now and would like some advice please.

My home is in Nottingham and from Sep-07 until Nov -08 I worked for a client in Leeds.
Jan-09 to Jan-10 for a client in Birmingham.
Feb-10 onwards I'm back at the client in Leeds.

Will HMRC regard my current engagement with the client as a continuation of the original contract rather than resetting the clock back to zero ?

Thanks in advance.

I believe this is the situation where the 40% rule comes in. Have you spent more than 40% of your time onsite in the last 2 years? Well it looks like you were not there for 15 months and have been back for 4. So over that last 24 months you have spent 9 months on site - 37.5% - so it looks like you're ok. Even as time goes on you should be OK as the previous 24 months will include less of your original time so you should stay at 37.5%.

[DrEvil]

I believe this is the situation where the 40% rule comes in. Have you spent more than 40% of your time onsite in the last 2 years? Well it looks like you were not there for 15 months and have been back for 4. So over that last 24 months you have spent 9 months on site - 37.5% - so it looks like you're ok. Even as time goes on you should be OK as the previous 24 months will include less of your original time so you should stay at 37.5%.

Thanks for the response Lje, however does this mean that I can only therefore spend around 10 months with the client this time as after that I will be over the 40% in two years??? or are you essentially saying that you think my 2 year counter has been reset to zero... I wish there were no grey areas in these rules!!

[lje]

Thanks for the response Lje, however does this mean that I can only therefore spend around 10 months with the client this time as after that I will be over the 40% in two years??? or are you essentially saying that you think my 2 year counter has been reset to zero... I wish there were no grey areas in these rules!!

I don't think so. My understanding is that the 40% rule should be used when you have not worked continuously at a particular location, ie where there was a break in the middle or you worked there part time. By the time you get to 10 months you have only worked at that location for the previous 10 months in the last 24 - no break. At that point I think that it works as usual with the 24 continuous months. I could be wrong though...

[simes]

No it isn't, as it can be considered to be in the same geographic location.

Actually, on reflection what do you mean by a 'restart'?

If you mean 'reset the expenses clock back to zero' then no.

Thanks both.

Oh well.

[Bob Jones]

When the legislation was written there had to be limitations on the amount of relief available. If you are at the same site for a continuous period of more than 24 months then you cannot claim from the time at which you know you will be there for more than 24 months - which might be from day one. A continuous period is defined in a law as spending a significant period of time at the workplace - the rule of thumb is more than 40%. Now - more than 40% could mean, eg, more than 2 days a week on average or it could be that there is a break in attendance resulting in less than 40% of time spent at the workplace, For example - a 3 year contract - 2 days a week at workplace A and three days at week at workplace B. A is allowable as it is not more than 40% - B is not allowable as it is more than 40%. And, for example - a full time contract at workplace A for 12 months - then to workplace B for 6 months - then back to A for 12 months. The second contract at A will take you above the 24 months and in that first 24 months period the %age of working time at A is 75%, therefore the second period is not allowable. I was looking at a Chartered Accountants website recently where they say that you are allowed 24 months at the site even if there is a break and consequently in the second example they would say that the second 12 months is allowable as the two periods add up to 24 months - that is NOT the case - it is as I have said - the second 12 months would not be allowable. The test when you return to a workplace (workplace A) and your contract is for less than 24 months (because if it is for more than 24 months you cannot claim) is to look over the last 24 months - were you at workplace A? If the answer is yes then check the %age as in the example above - 40% or less and you can claim - more than 40% and you cannot. The figure of 40% is time spent working - not time spent working at workplaces, or at least this was the view of the specialist at HMRC a few months ago - I did point out that this was open to abuse - eg if you are on 40.03% just claim that you spend a few hours every other Saturday afternoon working at home - but they didn't seem bothered .....
Bob

[jjayaraman]

more than 2 years - contract same client but moved to a different location

The answer is 2 Bob....from the point you know you are going to be there over 2 years.

Hi Guys

What if the same client but the work location moved after 2 years ?

Thanks
Jay