24 month Rule - Travel Expenses

[dagenheis]

Hi,
I have looked at ContractorUK article regarding the 24-month rule and few other posts. I am clear that this rule has nothing to do with IR35 but i still have a particular aspect to clarify.

Can someone give share their viewpoint about this specific case:

I started working at this client site in 2010 through an umbrella company. I was getting my mileage (and meal) expenses paid through that company.

After about a year, I starting working through my own ltd company but I am still working for the same client. Now I am paying mileage expenses through my own company. As a rule, this client does not keep contractors beyond 2 year , my contract will be ending a couple of days before 2 years (01 Aug - 29 July).

Generally, I travel to one location for 4 days and work from home/another office once a week.


Can someone advise whether my 2 years travel expenses clock started from the beginning or when I started working through my own limited company?

I just found out that the client is thinking to offer another contract after few weeks of break. It is not firm position though.

As I am starting to look for a new contract soon, I want to find out if I can take a break of couple of weeks and return to the same client. Would it have any implications in terms of 24 month rule or any other taxation stuff?

many thanks,


P.S: By looking at my contract documents, I realized that there was even a gap of one day between the end and the start dates of two contract extensions e.g. previous contract ending on 28th and the new contract starting on 30th. Is there any significance of this gap? I suspect it was just the weekend and the agency did not pay attention.

[cojak]

Hi,

Can someone advise whether my 2 years travel expenses clock started from the beginning or when I started working through my own limited company?


As I am starting to look for a new contract soon, I want to find out if I can take a break of couple of weeks and return to the same client. Would it have any implications in terms of 24 month rule or any other taxation stuff?

No. It has nothing to do with your company. And it has nothing to do with contracting or permanent employment.

It has EVERYTHING to do with location.

If you have been there 24 months and spent over 40% of your time there (and 1 day a week WFH still makes it over 40%), then you will not be able to claim once you know that your contract will take you over 24 months.

And the location can mean anywhere in the City of London (or close to it) or similar.

I would say that 50 miles and you can argue it but I've heard people being challenged for working along the M4 corridor between Bristol, Swindon and London.

The only way you can go back is to go to another contract for 6 - 12 months* and then return - that 'resets the clock'.

I would only feel safe if I moved from London to Manchester, Leeds, Birmingham, or Bristol.

*I recommend 9 - 12 months, others recommend 6 months.

So none of your suggestions for avoiding it will work.

[northernladuk]

Hi,
I have looked at ContractorUK article regarding the 24-month rule and few other posts.

Not very well it seems

[cojak]

Not very well it seems

Not sure he liked the advice...

[Scrag Meister]

No. It has nothing to do with your company. And it has nothing to do with contracting or permanent employment.

It has EVERYTHING to do with location.

If you have been there 24 months and spent over 40% of your time there (and 1 day a week WFH still makes it over 40%), then you will not be able to claim once you know that your contract will take you over 24 months.

And the location can mean anywhere in the City of London (or close to it) or similar.

I would say that 50 miles and you can argue it but I've heard people being challenged for working along the M4 corridor between Bristol, Swindon and London.

The only way you can go back is to go to another contract for 6 - 12 months* and then return - that 'resets the clock'.

I would only feel safe if I moved from London to Manchester, Leeds, Birmingham, or Bristol.

*I recommend 9 - 12 months, others recommend 6 months.

So none of your suggestions for avoiding it will work.

WCS

Everything to do with location, Been contracting in London for 5 years now, only 2 years of this was I able to claim expenses for rent etc., even though I worked in The City, Canary Wharf, back to the city, back to Canary Wharf. My view is that there needs to be a significant difference in locations.

[SimonMac]

Ignore the advice above, obviously you just want to hear that yes you can keep claiming the expenses so go for it, the chances that HMRC will investigate you are slim anyway

[matzie]

I would say that 50 miles and you can argue it but I've heard people being challenged for working along the M4 corridor between Bristol, Swindon and London.

I think Hector's advice on this is relatively clear, compared to some other areas (!) - it's not the physical distance that matters (or there would be a specified limit in miles), it's the travelling time/convenience and, particularly, the cost, of the journey involved that matters:

Sometimes it may be difficult to decide whether a change of workplace should be recognised. The basic principle is that a change in the location or the boundaries of a workplace will be recognised as a change of workplace where the change has a substantial effect on:

the journey an employee has to make to get to work and, in particular, the cost of that journey.
In practice you should recognise the change of workplace in all cases except where the change has made no significant difference to the commuting journey.

Where these conditions are met the new location is a new workplace even if it is close to the old workplace.

(from EIM32280 - Travel expenses: travel for necessary attendance: safeguards against abuse: changes to a workplace )

The examples given at the bottom of that article include EIM32282 - ten more stops on the tube, no change in cost - 'caught' and EIM32283 - one side of bridge to the other - 'not caught'.

Of course, these example neglect to say whether the worker in EIM32282 would have been 'caught' if those ten stops meant she passed a zone boundary and needed a more expensive ticket. My gut feel is that if the cost had increased by a non-trivial amount she would be safe. At least, I hope so :-)

[northernladuk]

I think Hector's advice on this is relatively clear, compared to some other areas (!) - it's not the physical distance that matters (or there would be a specified limit in miles), it's the travelling time/convenience and, particularly, the cost, of the journey involved that matters:

(from EIM32280 - Travel expenses: travel for necessary attendance: safeguards against abuse: changes to a workplace )

The examples given at the bottom of that article include EIM32282 - ten more stops on the tube, no change in cost - 'caught' and EIM32283 - one side of bridge to the other - 'not caught'.

Of course, these example neglect to say whether the worker in EIM32282 would have been 'caught' if those ten stops meant she passed a zone boundary and needed a more expensive ticket. My gut feel is that if the cost had increased by a non-trivial amount she would be safe. At least, I hope so :-)

I believe anywhere in London keeps the clock going so passing a zone boundry makes no difference.

You have to think why 24 month rule was introduced and who for. It is more for permies relocating. They can claim for two years when they have relocated and two years is deemed a reasonable enough time for them to relocate if they have to and then stop claiming. It isn't really set up for us hence the difficulty in applying it.

To meet the spirit of why the rule was created you would have to take in to account geographical location. If I was permie and working in north Manchester I would be quite happy to take a job in Central Manchester as it doesn't really change my commute much so by the same token a contract change between those two would not constitute a restart of the clock. If you went from North Manc to say Leeds, that is a hefty commute so would restart the clock.

Getting a role a couple of tube stops away would be an acceptable distance to get a new job and swallow the commute, so it should be the same for not starting the clock for contractors

I believe there is also an example that no where in London would restart the clock. The following mentions anywhere in the City of London

Travel expenses: travel for necessary attendance: definitions: temporary workplace: example

The bridge is a terrible example and you have not read it properly. He does NOT go from one side of the bridge to the other... he is building it! He has to take a different route to get all the way around to the other side which we have to assume is a considerable change in distance/time.

I would hardly call a zone change a considerable change in cost so your gut feeling is wrong.

[cojak]

And you obviously missed my point when I said I know of one person who was challenged for working along the M4 corridor.

Unless you don't know where I'm talking about...

[matzie]

Thanks for your replies; I will certainly take them into consideration. I'd seen EIM32089 as pertaining specifically to locations inside or very near to the Square Mile, making it clear that they would count as the same location; I certainly hadn't thought of it as applying to 'anywhere in London'.

I agree that just a few extra stops shouldn't matter, but if the journey is both longer and more expensive, then I had previously thought that would satisfy the advice in EIM32280. And I agree that I may need to my reevaluate my understanding of the bridge one too. (EDIT: actually I never meant to imply that I thought he was just *crossing* the bridge; my understanding was that he worked on one side for <24mo, then the other for <24mo, and although they were close as-the-crow-flies, the extra distance and cost incurred made them separate workplaces. I wonder whether the bridge example would apply equally well to some Tube-type scenario where the second site requires a radically different route with several changes...like mine:

My situation actually is a lot more than just single zonal change, it's an hour extra journey and tripled daily cost; both of which I'd be confident to defend if necessary, and if HMRC disagreed, then the warchest would be raided; if there's one thing that I've learned from the great advice of people here, it's maintain a good warchest. I've also only recently passed 24mo in "the whole of London" and myco's not yet reimbursed any of my travel expenses on my new contract, so if after my re-evaluation I agree it's not so clearcut, I'll just take the hit.

As for the M4 corridor, well as I say to agents all the time when they try to sell me the merits of a contract in Somewhere-upon-Tweed, I'm *really good* at my contracted skills, but totally crap at geography :-)