IR35 and working at one location

[SideShowBob]

Hi,

I have been contracting for a large well known financial institution for the almost 2 years.

They have recenlty outsourced to another company who have expressed an interest in picking up my contract when it expires.

What I am concerned about is the fact that I have been working at the same location for 2 years and if I take the new contract, although officially it is with a seperate company it is still working at the same location.

Would I be inside IR35?

[boredsenseless]

Location doesn't mean IR35 although it can certainly be a pointer.

If the rest of your service is IR35 safe then it shouldn't matter:-


i.e. your working practices and the actual true meaning of the services provided i.e the financial institution and the other company see you as a service provider and not just an employee.

However if you are already close to the wind on IR35 staying in the same location may affect you.

Regardless of IR35 you may still be affected by the Inland Revenues definition of Temporary Office, which makes no allowance for the change of contract only the address at which you work. After 2 years of an office being classed as temporary it becomes notionally your base office, and at this point no travel expenses can be offset against corporation tax. This happens for employees of large consultancies also, although in these cases the consultancy either rotate the staff or shoulder the additional costs.

[Robot]

Travel two year rule

After 2 years of an office being classed as temporary it becomes notionally your base office,

Please note - It is at the point you know you are going to be there for two years that is important.

Sign 25 month contract no travel claim
Sign 6 + 6 + 6 + 5 should be ok for 23mths

[Bradley]

Re:Travel

Please note - It is at the point you know you are going to be there for two years that is important.

Sign 25 month contract no travel claim
Sign 6 + 6 + 6 + 5 should be ok for 23mths

Only if your not affected by IR35. IR35 creates a hypothetical contract between the contractor and the end-client. If you are IR35able then that contract is between employee & employer and the site is your permanent workplace surely, so therefore, no deduction for travel or subsistence? Travel to a temporary workplace is the only travel allowable.

[malvolio]

No,no, no... You're applying logic to IR35 again.

Listen carefully - IR35 is a personal tax, on the basis that it is you, the individual, who are liable for the tax involved and it is you who are the subject of the hypothetcial employment contract. YourCo is not involved and can still claim legitimate business expenses, which includes travel costs from your office to your place of work, 24-month ruling and all as well as stuff like VAT.

The 5% "expenses" is for running the company, training and all the other usual costs and in any case is only there to calculate the deemed salary for PAYE and NIC purposes - basically, take gross turnover, extract legitimate business expenses as per normal rules (so you don't try and claim £50 a mile or take a diversion through Inverness to get to Penzanze), 95% of what's left is the IR35 liability.

It's incredibly unfair and stupid, but it's not rocket science...

[Robot]

After 2 years of an office being classed as temporary it becomes notionally your base office, and at this point no travel expenses can be offset against corporation tax.

Sorry Bradley - Should have included the full para - It was the travel rules I was more interested in rather than the IR35 position.

[Bradley]

Re:travel

Sorry Bradley - Should have included the full para - It was the travel rules I was more interested in rather than the IR35 position.

But do you think what I'm saying about travel expenses and IR35 is right?

[tim123]

But do you think what I'm saying about travel expenses and IR35 is right?

I don't. The IR conceeded this point during the initial consultation phase many decades (was it) ago. It may still be in the FAQs

tim

[xoggoth]

Agree. Malvolio/Tim are correct.

Also the expected to be over 2 years thing. NOT that I would wish to encourage tax fiddling, god forbid! the very idea! however, will the IR notice that the address is the same?

[Robot]

But do you think what I'm saying about travel expenses and IR35 is right?

No -

Travel and Subsistence should not be claimed were

a) You know you are going to be at the same workplace / geographically location for more than two years.

b) Were an individual may expect, when they take up the employment with a company that this will be their only employment.

The majority of contractors on this board say ‘if you have a three month contract or less go with an umbrella company’ I think umbrella companies need to review this with regard to point B.

Also the expected to be over 2 years thing. NOT that I would wish to encourage tax fiddling, god forbid! the very idea! however, will the IR notice that the address is the same?

They will on an Employer compliance review, it is their job afterall!