Early extension........

[Tingles]

Hi,

I was asked to extend today ,my current contract doesn't end until end of Jan 09.

I think it's - Budget, use it or lose it....

They want me for 12 months - from Feb 09....

I've advised it takes me passed the HMRC 2 year rule and they are increasing my rate to allow for my travelling / B&B expenses.

I'm 'appy....

However.... a sale ain't a sale until the contracts signed and the monies in the bank!



T

[Bagpuss]

Don't forget you lose the right to claim from the moment you sign the contract that will exceed 2 yrs. So from Feb you won't be able to claim anymore.

[TheFaQQer]

Don't forget you lose the right to claim from the moment you sign the contract that will exceed 2 yrs. So from Feb you won't be able to claim anymore.

Surely it's from today, whether he signs or not?

HMRC website says

This rule says that a place cannot be a temporary workplace if the employee’s attendance is:

• in the course of a period of continuing work at that place lasting more than 24 months, or
• if it is at a time when it is reasonable to assume that it will be in the course of such a period.

So now that the OP is aware that the role will probably run for more than two years, shouldn't they stop claiming expenses now? The very best would be as soon as the new contract is signed.

[BolshieBastard]

Surely it's from today, whether he signs or not?

HMRC website says


So now that the OP is aware that the role will probably run for more than two years, shouldn't they stop claiming expenses now? The very best would be as soon as the new contract is signed.

Nope. It takes effect from when the next contract starts and the period overlaps the 2 year rule not sometime in the current contract.

[TheFaQQer]

Nope. It takes effect from when the next contract starts and the period overlaps the 2 year rule not sometime in the current contract.

OK - it's the best case scenario I laid out above, then.

Although, if it were me, I'd start preparing a defence that I never knew anything at this stage, just in case there's an audit and we're wrong

For clarity, here's the full quote from HMRC Tax Bulletin Issue 74:

The 24 month rule
This rule says that a place cannot be a temporary workplace if the employee’s attendance is:

• in the course of a period of continuing work at that place lasting more than 24 months, or
• if it is at a time when it is reasonable to assume that it will be in the course of such a period.

The "reasonable to assume" test means that the parties need to take account of changing circumstances. If an employee is sent to work at a place to perform a task which is expected to take 20 months (and which is therefore of limited duration), and which does in fact take 20 months, it will be a temporary workplace throughout. However if there are delays which mean that the task will in fact take more than 24 months the place will cease to be a temporary workplace from the point when it becomes known that the 24 month limit is going to be exceeded. That could well happen even before the original 20 months point is reached.
Conversely, if a task is expected to last for 30 months that workplace will be a permanent workplace from the start. If it should turn out that the task will in fact take less than 24 months the place will become a temporary workplace only from the point when the change of duration becomes known.

[Tingles]

Hmmm....

Good points - I will have to have some creative discussions with the client.

I guess they could cancel the current contract and start a new one for 11 months - making it just under two years.

Thanks for your input.


T

[Sysman]

Surely you don't know with certainty that the contract is going to be extended past the deadline until you have the signed contract in your hands?

[TheFaQQer]

Hmmm....

Good points - I will have to have some creative discussions with the client.

I guess they could cancel the current contract and start a new one for 11 months - making it just under two years.

Thanks for your input.


T

If they'll do it, then that's what I'd do

Someone here (can't remember who though) pointed out that if you stop claiming the expenses because you would go over the two years, and then the gig gets cancelled before two years is up, then you can't go back and claim for that time when you didn't.