The 24 Month Rule in a nutshell

[Jase]

It was JLJ that I was thinking of, not Dragonfly - outside for the first three years, inside for the rest of the contract.

Time itself isn't important - it's the implication that over time people will see you as an employee rather than a contractor.

So, in practice it is not a hard and fast 24 month rule (like travel expenses). Instead, duration in contract is one of many factors that decide IR35 status.

[TheFaQQer]

So, in practice it is not a hard and fast 24 month rule (like travel expenses). Instead, duration in contract is one of many factors that decide IR35 status.

No - behaviour decides IR35. But the client may see you as an employee the longer you are there.

[malvolio]

So, in practice it is not a hard and fast 24 month rule (like travel expenses). Instead, duration in contract is one of many factors that decide IR35 status.

Ermm...?

The 24 month rule is hard and fast, just improperly understood by most of us about when it applies.

However there is early case law that says that duration is not a factor in IR35 assessments; one where the guy had been on-site for seven years and, to a lesser extent, inherent in the original Readymix case that set the basis for employment. Very simplistically, if your contract says you are there to deliver "this" as opposed to "what we tell you to deliver from time to time" and we won't pay you if "this" isn't needed, you're clear.

[Jase]

Ermm...?

The 24 month rule is hard and fast, just improperly understood by most of us about when it applies.

However there is early case law that says that duration is not a factor in IR35 assessments; one where the guy had been on-site for seven years and, to a lesser extent, inherent in the original Readymix case that set the basis for employment. Very simplistically, if your contract says you are there to deliver "this" as opposed to "what we tell you to deliver from time to time" and we won't pay you if "this" isn't needed, you're clear.

I may not have been clear... I get the the 24 month rule is hard and fast in relation to travel expenses. There is not a 24 month rule in relation to IR35.

[LisaContractorUmbrella]

I may not have been clear... I get the the 24 month rule is hard and fast in relation to travel expenses. There is not a 24 month rule in relation to IR35.

No - there is no specific period after which you could be considered an employee within IR35 - the point people are making is that it is likely that, the longer you work somewhere, the more you will become integrated into the workforce therefore becoming a disguised employee and therefore more likely to be inside IR35

[Forbes Young]

I may not have been clear... I get the the 24 month rule is hard and fast in relation to travel expenses. There is not a 24 month rule in relation to IR35.

The 2 year temporary workplace rule is completely separate to IR35. They are two totally unrelated pieces of legislation.Travel can still be claimed from your ltd company even though you operate inside the IR35 Legislation.

Graeme Bennett
ACMA MBA

[richy]

Re-instating travel expenses for client visits?

Wondering if I can re-instate travel expenses for trips to clients. Ltd co is diversified. Hoping this means I can claim again.

I'm beyond the 2 year rule, so have not been claiming expenses for daily visits to client A (trains and taxis). LTD CO is diversified, and covers a few areas now:

Office in London, client in Cambs.
* Client A (me) 60% of turnover
* Client B (my employee, who mainly works from home) 30% of turnover
* Some IP licencing 5%
* Property management 5%
* all my business meetings with other clients are in London (or abroad).

Cheers, Rich

[malvolio]

Wondering if I can re-instate travel expenses for trips to clients. Ltd co is diversified. Hoping this means I can claim again.

I'm beyond the 2 year rule, so have not been claiming expenses for daily visits to client A (trains and taxis). LTD CO is diversified, and covers a few areas now:

Office in London, client in Cambs.
* Client A (me) 60% of turnover
* Client B (my employee, who mainly works from home) 30% of turnover
* Some IP licencing 5%
* Property management 5%
* all my business meetings with other clients are in London (or abroad).

Cheers, Rich

Well Client B has no impact at all on your personal taxation, since they aren't your expenses. Also it's not about turnover, it's about on site presence (to be more precise, approximate location presence) so if your property visits are fairly close to your client ones for example, they don't count either

Just a wild thought, but apply the algorithm in OP1 and see if it fits...

But if your question is actually "Can I restart claiming expenses", the answer is yes, provided you pass the 40% off site qualification.

[LisaContractorUmbrella]

Wondering if I can re-instate travel expenses for trips to clients. Ltd co is diversified. Hoping this means I can claim again.

I'm beyond the 2 year rule, so have not been claiming expenses for daily visits to client A (trains and taxis). LTD CO is diversified, and covers a few areas now:

Office in London, client in Cambs.
* Client A (me) 60% of turnover
* Client B (my employee, who mainly works from home) 30% of turnover
* Some IP licencing 5%
* Property management 5%
* all my business meetings with other clients are in London (or abroad).

Cheers, Rich

So do you spend more than 40% of your time going to the same location that you've been going to for over 2 years? If yes, then no you can't claim.

[richy]

So do you spend more than 40% of your time going to the same location that you've been going to for over 2 years? If yes, then no you can't claim.

Many thanks to both of you for replying.

I still spend over 40% of my time going to the same location that I've been going to for 2 years. So as you say, I can't claim the £7,400 as expenses, (which would have saved around £1500 in taxation..)

I'd need to get down to 2 day on site (3 day working from my office). Only 2 days on client site that would save £4,440 travel expenses.. therefore only £2960 on travel, of which £592 would be saved in taxation.

.. so best option is to work on my site, rather than client!