Contract Re-Newal 24 Month Rule

**eek** · 11 September 2012, 19:35

Originally posted by kaiser78 View Post

I understand my contract renewal is in progress although not sure how long for at the moment. At end Feb next year I will have been at client co for 2 years and so 24 month expense rule will kick in.

My last renewal was for 6 months, and there is a possibility of being offered the same period again. So I am thinking of contacting the agent and advising I only wish for an an extension of 4 months and x weeks only (taking me up to 2 years) before being offered another 6 months, and thefore by implication falling within the 24 month rule.

So is it okay for me to explain the reasoning to the agent ? I so could this come across to the client co that there is a risk I may not be committed them by not taking their full extension period (assuming it is a 6 month renewal of course) ?

Thoughts welcome please.

You expect a renewal beyond 24 months so even this renewal is pushing it a bit. My advice would be to stop claiming as (after tax) is it really worth that much money to you?

**kaiser78** · 11 September 2012, 19:37

Originally posted by eek View Post

You expect a renewal beyond 24 months so even this renewal is pushing it a bit. My advice would be to stop claiming as (after tax) is it really worth that much money to you?

Thanks - just to add I am claiming 300-400 miles per week, depending on what days I need to be at clientco, which over a month is a significant amount.

**kingcook** · 11 September 2012, 19:43

Originally posted by eek View Post

You expect a renewal beyond 24 months so even this renewal is pushing it a bit. My advice would be to stop claiming as (after tax) is it really worth that much money to you?

It's not just the tax saving though is it. You're having to shell out out of your own pocket.

So as well as not being able to get corp tax relief (as it's not a company expense) you would also need to pay yourself extra in salary/dividends to make up to the same amount as what you'd previously been paid by your ltdco.

(Only thought of this the other day, i'm ready to be proved wrong!)

**Wanderer** · 11 September 2012, 20:00

Originally posted by kaiser78 View Post

So I am thinking of contacting the agent and advising I only wish for an an extension of 4 months and x weeks only (taking me up to 2 years) before being offered another 6 months, and thefore by implication falling within the 24 month rule.

From a purely business point of view with all the travelling, the contract may not be economically viable beyond 24 months so it might be reasonable for someone to work right up to the 24 month limit and then leave but you are treading a fine line here.

If you took (say) a 4 month extension and then move on then you're OK but if if you are just going to say sod it and take a further extension beyond 24 months then you are on very dangerous ground because it will look like an odd pattern of contract extensions and HMRC may smell a rat (probably not unreasonably too).

**kaiser78** · 11 September 2012, 20:11

Originally posted by Wanderer View Post

From a purely business point of view with all the travelling, the contract may not be economically viable beyond 24 months so it might be reasonable for someone to work right up to the 24 month limit and then leave but you are treading a fine line here.

If you took (say) a 4 month extension and then move on then you're OK but if if you are just going to say sod it and take a further extension beyond 24 months then you are on very dangerous ground because it will look like an odd pattern of contract extensions and HMRC may smell a rat (probably not unreasonably too).

My previous extensions have all been 3 months except for the last which was 6 months, so as least have not been consistent if HMRC asked. And to stress I have not been told the extension period yet, so far as I am concerned may not make it past 24mnths anyhow.

An alternative is to ask for a rate rise to cover maybe not all, but some of the expense. Not sure though if clientco would go for this but may be worth a try ?

**kingcook** · 11 September 2012, 20:19

Take a 5 month extension.

Will the contract have any clauses along the line of, "any party is not obliged to give/accept any work after the end of this contract"?

**MyUserName** · 11 September 2012, 20:55

Remember that hmrc are not limited to just reading contracts. They can challenge things in court in front of an impartial judge, if you were a judge and you saw this would you rule it was a deliberate attempt to avoid paying due costs?

**northernladuk** · 11 September 2012, 21:06

7of9 asked this exact question here....

http://forums.contractoruk.com/accou...ract-date.html

By fudging the dates you KNOW you are going to be there. Asking for a 4 month and knowing you will get a 2 monther after instead of 6 months means you KNOW you will be there. Doesn't matter about the contracts. If you know you should stop. If you want to take risk on fudged contracts good luck to you but as already pointed out contracts with odd finishing dates that finish the month of the 24 month is more likely to get noticed than just claiming it regardless IMO. Screams a fudge and you can bet your bottom dollar they will go through everything else with the finest comb you can imagine as you have proven to them you are dishonest....

But.. others might say f' em you will never get investigated...

Up to you,,

**northernladuk** · 11 September 2012, 21:11

Originally posted by kaiser78 View Post

Thanks - just to add I am claiming 300-400 miles per week, depending on what days I need to be at clientco, which over a month is a significant amount.

So what, you are over or you aren't. Don't let the amount of money sway your decision as to whether you commit evasion or not. Oddly enough the more it costs means you have more chance of fudging it when in fact you will be in more trouble... if that makes sense. If it was less you would do it properly but because it is quite a bit you are happy to fudge it? Hmmmmmm

Contract Re-Newal 24 Month Rule