expenses - the 24 month rule, a different question

[Wanderer]

Like so many things it seems to be a grey area. So what happens if you decide that the 24 month rule doesn't apply and claim expenses?

If you get investigated, will you be fined/penalised or will you just have to pay back the tax without penalty?

What if you show them that you weren't blatently taking the piss but gave careful consideration and decided in good faith that the 24 month rule didn't apply to your situation and it's not our fault if the rules are as clear as mud.

Any accountants seen this situation? What happens?

[malvolio]

If you make a mistake, or receive bad advice, you are liable for the corrected tax and interest. If you deliberately ignore a rule, they may impose penalties. Thats the same for any self-assessed tax declaration.

I know of people who have had expenses disallowed for tax relief. Most sucessfully defended their position but one guy got stung for a couple of grand (then again, he didn't listen to what he was told).

And I would argue that, for once, these rules are actually pretty clear. As soon as you know you will be there for more than 24 months starting today and counting back, and have spent more than 40% of your time at the client's site, expenses stop.

[Dark Black]

Thanks for all the discussion guys

For the record, if my accountant had said definitely one way or the other then I wouldn't be querying his advice, it's purely that it seemed a tad grey that I posted about it here.

Looking at it from Mal's POV - i.e working backwards, actually "seems" to make it more likely that it's ok to claim:

Last year I had approx 10 months out and the previous year had several months away from that client, hence in total, over the last two years I'd only worked with that client for a total of 9 months. Hence, by Hector's own rules I've spent less than 40% of the the last 24 months at the client.

Looking at the linked HMRC pdf file sections 3.12 onwards seem to back this up, particularly 3.19 (the Ferdinand example)

[escapeUK]

Read section 3.16

"A period of continuous work can remain continuous even where there is a break in attendance."

Isnt this just a perfect example of how the HMRC rules are nonsense. No wonder they cant enforce IR35.

The more I read about their workings the more I think I should join PCG to protect against them investigating my companies interpretation of their made up nonsense.

[Wanderer]

Basically, HMRC claim that a period of continuous work can be continuous even if it's not continuous?

escapeUK is exactly right. How are we supposed to interpret that sort of tulipe. Last one out, please turn out the light.

[LisaContractorUmbrella]

Whilst I would agree that a lot of HMR&C's rules and regs are about as clear as mud the 24 month rule is pretty straight forward and the penalties for not playing by the rules are pretty harsh. Also, as Mal says, the responsibility to understand legislation falls on your shoulders - 'I didn't know' will never be accepted as a defence by HMR&C I'm afraid



Admin note: further general reading here: 24 month rule