(Another) two year rule post

[Markerton]

Thanks for all the help, folks.

So, I contacted my agency and asked them to change the end date of the assignment to one day before the two year rule sets in. This was also immediately changed with my umbrella organisation.

I phoned them this morning to remove the lock on my expenses and they stated that "because the original end date was past the two year mark, they're unable to remove the lock even though it's now before then." I asked why, and they stated it's because HMRC would see this as "playing the system," and they "wouldn't be happy doing that."


A bit more detail for those curious; I'm on a 13 week rolling contract, which my agency have managed to get rolled over another 12 months. It's certainly not FTC.

[cojak]

Thanks for all the help, folks.

So, I contacted my agency and asked them to change the end date of the assignment to one day before the two year rule sets in. This was also immediately changed with my umbrella organisation.

I phoned them this morning to remove the lock on my expenses and they stated that "because the original end date was past the two year mark, they're unable to remove the lock even though it's now before then." I asked why, and they stated it's because HMRC would see this as "playing the system," and they "wouldn't be happy doing that."


A bit more detail for those curious; I'm on a 13 week rolling contract, which my agency have managed to get rolled over another 12 months. It's certainly not FTC.

Yep, I'm afraid that this is a bit of a lesson learned, the audit trail will show that you do know and short of actually leaving the contract on the end-date (which can't be proven at this stage) I can see why the umbrella is refusing this.

If it's causing financial hardship you may have to end the contract.

[Lewis]

Yes, you are correct, it is geographical.

Expenses stop as soon as you know you will pass the 24 month rule.

See here for more details: http://forums.contractoruk.com/accou...-nutshell.html

What about when changing companies?

e.g. I know a few permies that have worked in the City and then gone contracting, still in the City, and claimed travel expenses.

I've always assumed this is not allowed. But they always seems to do it - the argument being the 2 years starts from your first contract and doesn't include you previous permanent work. Are they in any way correct?

[jmo21]

What about when changing companies?

e.g. I know a few permies that have worked in the City and then gone contracting, still in the City, and claimed travel expenses.

I've always assumed this is not allowed. But they always seems to do it - the argument being the 2 years starts from your first contract and doesn't include you previous permanent work. Are they in any way correct?

They are wrong.

It will only be an issue IF they get investigated.

Their accountant might catch it and warn them, but my accountant has never asked to see my contracts and wondered about locations (should they? maybe I should ask! but then I know how it works, so pretty comfortable with it)

[cojak]

What about when changing companies?

e.g. I know a few permies that have worked in the City and then gone contracting, still in the City, and claimed travel expenses.

I've always assumed this is not allowed. But they always seems to do it - the argument being the 2 years starts from your first contract and doesn't include you previous permanent work. Are they in any way correct?

No they are not.

Travel expenses: travel for necessary attendance: safeguards against abuse: changes to a workplace: example

[LisaContractorUmbrella]

Thanks for all the help, folks.

So, I contacted my agency and asked them to change the end date of the assignment to one day before the two year rule sets in. This was also immediately changed with my umbrella organisation.

I phoned them this morning to remove the lock on my expenses and they stated that "because the original end date was past the two year mark, they're unable to remove the lock even though it's now before then." I asked why, and they stated it's because HMRC would see this as "playing the system," and they "wouldn't be happy doing that."


A bit more detail for those curious; I'm on a 13 week rolling contract, which my agency have managed to get rolled over another 12 months. It's certainly not FTC.

I am not sure why the umbrella company are refusing this. If the original extension paperwork has been revoked then it would be as if it had never existed; there is now a contract in place which only demands the OP's services until July 2015 and that is the legally binding document. Provided that there is nothing in the original documentation or in any written correspondence which gives an expectation that the contract will extend beyond 24 months I can't see that there's a problem

[JRCT]

I am not sure why the umbrella company are refusing this. If the original extension paperwork has been revoked then it would be as if it had never existed; there is now a contract in place which only demands the OP's services until July 2015 and that is the legally binding document. Provided that there is nothing in the original documentation or in any written correspondence which gives an expectation that the contract will extend beyond 24 months I can't see that there's a problem

I agree. The rule is 24 months. If you're under that by one day, then it's allowed. That's why there's a rule, and 'a system to play with'.

You have a £10k a year tax free salary allowance. If you pay yourself £9,999 tax free is the umbrella going to stop this because it's 'playing the system'? Of course not.

[jmo21]

I am not sure why the umbrella company are refusing this. If the original extension paperwork has been revoked then it would be as if it had never existed; there is now a contract in place which only demands the OP's services until July 2015 and that is the legally binding document. Provided that there is nothing in the original documentation or in any written correspondence which gives an expectation that the contract will extend beyond 24 months I can't see that there's a problem

My guess is they've made that decision to play it safe as opposed to it being truly necessary.

[Markerton]

My agency had contacted the umbrella organisation and had it extended to December 15, then shortly afterwards they would have asked them to change this to August 2015.

So in terms of audit trail, I guess there is something there somewhere.

This is the first time I've contracted (less than £15 an hour) which is why I used an umbrella company, but this is enough to make me never want to do it again in honesty. As it stands, I'm going to lose around an additional £200 a month in tax which I can't afford.

Looks like it's time to find a new job then!

Thanks to everyone for your help.

[TheCyclingProgrammer]

Remember, even if you find a new contract, if they are in he same location you still can't claim.