24 month rule - different ends of London

[LisaContractorUmbrella]

Well. I think you need to demonstrate that my new workplace is not different either because:

a) the cost of my new journey is not substantially different
OR
b) because I have artificially lowered the cost of my journey to avoid tax.

Do you accept that proposition or do you think it hangs off something else?

I think, my learned friend, that you have only considered a single aspect of the guidance which HMR&C has issued. The 24 month rule considers location and the time spent at that location; whilst the rule is to determine whether the cost of travel is allowable as an expense, the cost of the journey is not a consideration. HMR&C has applied comparators to allow individuals to assess whether or not a journey resulting from a subsequent contract will 'significantly' different and one of these is cost but the primary consideration should be the journey itself, both distance and time spent travelling

[Old Greg]

I think, my learned friend, that you have only considered a single aspect of the guidance which HMR&C has issued. The 24 month rule considers location and the time spent at that location; whilst the rule is to determine whether the cost of travel is allowable as an expense, the cost of the journey is not a consideration. HMR&C has applied comparators to allow individuals to assess whether or not a journey resulting from a subsequent contract will 'significantly' different and one of these is cost but the primary consideration should be the journey itself, both distance and time spent travelling

So according to this argument, cost of journey is both not a consideration, and a consideration but not the primary one. Leaving aside the observation that these two postulations cannot both be true, we must seek clarification that counsel for the HMRC is stating that the nature of the journey is of particular importance when compared to the importance of the cost of the journey, in determining whether a change of workplace should be recognised.

[LisaContractorUmbrella]

So according to this argument, cost of journey is both not a consideration, and a consideration but not the primary one. Leaving aside the observation that these two postulations cannot both be true, we must seek clarification that counsel for the HMRC is stating that the nature of the journey is of particular importance when compared to the importance of the cost of the journey, in determining whether a change of workplace should be recognised.

The cost of the journey is relevant to the argument insofar as an additional cost to the individual has to be a determining factor in any expense. In the case in question we would have to establish that the travel to the location of the second assignment had provoked an additional cost for the tax payer. If it had then this would be a primary consideration in determining whether the expense was allowable, under the terms of the 24 month rule, if the journeys were similar. I put it to you Milud that the taxpayer in this case will not be incurring any additional cost as a result of taking the assignment and that the journeys are so similar in both duration and length as to be almost indistinguishable. Therefore, we submit that tax relief should not be permitted upon the cost of the journey and that the tax payer subsequently is indebted to HMR&C for the sum of 400 millionty pounds including interest and penalties plus the pound of flesh nearest his heart.

[northernladuk]

The cost of the journey is relevant to the argument insofar as an additional cost to the individual has to be a determining factor in any expense. In the case in question we would have to establish that the travel to the location of the second assignment had provoked an additional cost for the tax payer. If it had then this would be a primary consideration in determining whether the expense was allowable, under the terms of the 24 month rule, if the journeys were similar. I put it to you Milud that the taxpayer in this case will not be incurring any additional cost as a result of taking the assignment and that the journeys are so similar in both duration and length as to be almost indistinguishable. Therefore, we submit that tax relief should not be permitted upon the cost of the journey and that the tax payer subsequently is indebted to HMR&C for the sum of 400 millionty pounds including interest and penalties plus a few ounces of flesh near his arse.

FTFY....

[Old Greg]

The cost of the journey is relevant to the argument insofar as an additional cost to the individual has to be a determining factor in any expense. In the case in question we would have to establish that the travel to the location of the second assignment had provoked an additional cost for the tax payer. If it had then this would be a primary consideration in determining whether the expense was allowable, under the terms of the 24 month rule, if the journeys were similar. I put it to you Milud that the taxpayer in this case will not be incurring any additional cost as a result of taking the assignment and that the journeys are so similar in both duration and length as to be almost indistinguishable. Therefore, we submit that tax relief should not be permitted upon the cost of the journey and that the tax payer subsequently is indebted to HMR&C for the sum of 400 millionty pounds including interest and penalties plus the pound of flesh nearest his heart.

This simply bears no relationship to any HMRC guidance. The relevance of a change in the cost of a journey is clearly that it is of particular importance in indicating whether a change in location leads to recognition of a new workplace. See below (my emboldening). There is

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.

There we have it.

Cost is not as you have said variously:

• 'not a consideration', or
• '[a consideration] but the primary consideration should be the journey itself', or
• 'relevant to the argument insofar as an additional cost to the individual has to be a determining factor in any expense'

but a particularly important factor (change of cost - not increase) in determining whether a change of workplace will be recognised.

Now, unless you intend to argue that I am now deliberately taking a shorter, easier and cheaper journey as an artifice to avoid tax, then I'm interested to see where you have to go next.

[LisaContractorUmbrella]

FTFY....

Apparently I have to spread some rep around before giving it to you again

[LisaContractorUmbrella]

This simply bears no relationship to any HMRC guidance. The relevance of a change in the cost of a journey is clearly that it is of particular importance in indicating whether a change in location leads to recognition of a new workplace. See below (my emboldening). There is



There we have it.

Cost is not as you have said variously:

• 'not a consideration', or
• '[a consideration] but the primary consideration should be the journey itself', or
• 'relevant to the argument insofar as an additional cost to the individual has to be a determining factor in any expense'

but a particularly important factor (change of cost - not increase) in determining whether a change of workplace will be recognised.

Now, unless you intend to argue that I am now deliberately taking a shorter, easier and cheaper journey as an artifice to avoid tax, then I'm interested to see where you have to go next.

The reason that HM&C have included the cost reference is because for anything to be classified as an expense an additional cost has to be incurred e.g. you cannot claim subsistence if you take a packet of sarnies to work that you have made at home; this is a fundamental point. So, you have to consider two elements - firstly whether or not the journey would be allowable as an expense under the 24 month rule which states that the journey has to be significantly different in terms of time taken to travel or distance and then you have to consider whether the change of location, if it already meets the criteria under the 24 month rule, has resulted in an additional cost being incurred by the tax payer.

[rd409]

I don't agree with your comments.

As for difference in cost:



The 250 miles per month works out about £100 per month. In what world is £340 per month not significant?

I know this is taking it a bit too far, but if both of your clients are in London, 6 miles apart, why were you not using the new route for the previous client? Even if the the client is in zone 6, the monthly travel card added on to your new ticket would be less than 250, so you would have saved around GBP 100 every month for last 20 odd months. Once you put this in perspective, HMRC will deem this new arrangement as purely to reset the clock.

[Old Greg]

I know this is taking it a bit too far, but if both of your clients are in London, 6 miles apart, why were you not using the new route for the previous client? Even if the the client is in zone 6, the monthly travel card added on to your new ticket would be less than 250, so you would have saved around GBP 100 every month for last 20 odd months. Once you put this in perspective, HMRC will deem this new arrangement as purely to reset the clock.

So you are saying that if the cost decreases then it is not a different workplace bit if it increases it is a different workplace (assuming it is not an artifice?)

[LisaContractorUmbrella]

So you are saying that if the cost decreases then it is not a different workplace bit if it increases it is a different workplace (assuming it is not an artifice?)

No what I am saying is that the primary consideration under the 24 month rule is location - distance and travelling time. The cost is then a consideration once it has been established that the location in terms of travelling time or distance is significantly different.