IT Contractor help

[scubadude]

Just found 'another' explanation on this link
Contractor doctor: can you clarify the 24 month expense rules?

According to David Colom, of the London-based contractor affairs specialist firm DJ Colom & Co.....

Imagine a case, one that is very common, in which a contractor is engaged for a 6-month period four times. That contractor can deduct expenses for the first, second, and third six-month period. But when it comes time to sign up for the fourth one, the contractor should reduce the period to 5 months and 3 weeks. The contractor can then truly say that the 24-month rule does not apply, nor did the contractor have any knowledge that it would last to 24 months--because it doesn't. ''Take a week off at the end of the contract,'' Colom says, ''and deduct your travel expenses.

Obviously if the client wants a fifth contract, you're out of luck.





I deduce from that, and particularly when reading the full article, that expectation = contract. Nothing more.

My understanding of the 24 month rule is that would all be fine, but if after the break the contractor starts a new contract with a different client in the same location then they would not be able to claim any expenses for the new contract unless it is in a completely different location (where a location is considered a geographical area) e.g. if previous contract was in London and new contract also in London then a contractor can't continue to claim expenses but if the new contract is in Southampton the contractor can claim expenses (with 24 month rules now being applicable to the new location)

[tractor]

...

My understanding of the 24 week rule is that would all be fine, but if after the break the contractor starts a new contract with a different client in the same location then they would not be able to claim any expenses for the new contract unless it is in a completely different location (where a location is considered a geographical area) e.g. if previous contract was in London and new contract also in London then a contractor can't continue to claim expenses but if the new contract is in Southampton the contractor can claim expenses (with 24 month rules now being applicable to the new location)

My understanding is that it's 24 MONTHS.

People giving advice also seem to miss that the criterial is 'beyond 24 months' so 4 contract of 6 months would not take you 'beyond' but a 5th one of course, would provided that the location had not changed materially and within the guidance during that time.

[AMH]

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

explaining the 24 month rule when working in the same area, but for different clients.

[jjdarg]

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

explaining the 24 month rule when working in the same area, but for different clients.

So in that case, it looks like it is only on the first contract that she may legitimately consider travel expenses (if she had been working outside of London prior to that, and had no expectation of being continuously working in the City at the time she took the first contract.)

[malvolio]

So in that case, it looks like it is only on the first contract that she may legitimately consider travel expenses (if she had been working outside of London prior to that, and had no expectation of being continuously working in the City at the time she took the first contract.)

No. Perhaps go and read the sticky on this subject as to why. However, the point the rule applies is when you know for certain or have a reasonable expectation that you will breach the 24 month/greater than 40% parameter. If you have an initial 12 month gig in the City, then two months in Oxford then find yourself back in the City for another 12 month contract, you then immediately exceed the 24 month rule. It's got nothing to so with the original intention.

The point - as it says in the sticky - is that it is a rolling window; you have to reassess it regularly and take the appropriate action.

[pippin123]

Hello,

the point i'm trying to make is, should this rule not be applied when i've done 24 months ? and not in the pretence, contract work is a contract you can be let go anytime so in this case how do they know i will be 24months ?

in other words come 1st of july 2015 i would have been on this contract for 24 months.

thanks.

[LisaContractorUmbrella]

Hello,

the point i'm trying to make is, should this rule not be applied when i've done 24 months ? and not in the pretence, contract work is a contract you can be let go anytime so in this case how do they know i will be 24months ?

in other words come 1st of july 2015 i would have been on this contract for 24 months.

thanks.

Unfortunately no - at the point at which you are aware that the contract will extend beyond 24 months travel and subsistence expenses are no longer allowable - those are the rules I'm afraid

[malvolio]

Hello,

the point i'm trying to make is, should this rule not be applied when i've done 24 months ? and not in the pretence, contract work is a contract you can be let go anytime so in this case how do they know i will be 24months ?

in other words come 1st of july 2015 i would have been on this contract for 24 months.

thanks.

Like I said (several times), as soon as you expect the duration to extend over 24 months - i.e. you have a contract with an end date past that limit - and assuming you spend 40% or more of your time on site, the rule should be applied immediately. If it turns out that doesn't actually happen, then you can claim the tax relief retrospectively. Which is why I said (also several times) you need to continually review your position.

However, always remember the location element. If you get a new gig in the same general area, the rule calculation still applies.

[mudskipper]

The first umbrella is correct. The second umbrella is lying to get your business. They won't be in trouble if HMRC catches you, you will be the one with the fine.

If you don't think that there is much chance of HMRC catching you then you could move anyway.

I vaguely remember someone posting a HMRC link somewhere that suggested a change of employer (not client) does reset the clock... Will have a google later and see if I can track it down.

[AMH]

I vaguely remember someone posting a HMRC link somewhere that suggested a change of employer (not client) does reset the clock... Will have a google later and see if I can track it down.

I was under the impression, if you worked in the same area for 2 different companies, then it is classed as continuous & you cant claim expenses.