Contract at same site approaching 2 years...

[Lucifer Box]

I have heard that if you switch employers (e.g. different umbrella or PSC) while staying at the same site that resets the clock.

That is not correct, I'm afraid.

[IR35 Avoider]

In as much as the HMCR site explains in some detail that it's not just the company you are currently working for that the 2 years applies to, but in fact it applies to other companies in the general area... i.e. the City... that it applies to.

It's not clear to me whether you are simply repeating the point I was responding to, not having understood the issue I was raising, or if you have understood the issue and there is an example that proves the loophole doesn't exist. (I've just had a quick scan through HMRC documentation and couldn't find the example you mention.)

What make me think you haven't understood is your reference to different companies in the City. Most contractors' PSC's or even umbrella companies (I suspect) do not have addresses in the city, so I think you have just repeated the point of the person I was responding, thinking we are talking about a change of client rather than a change of employer. (Clearly there is more than one contractor on this board who for whom the word "employer" conjures up an image of their client. I suspect some of them treat their contracts as IR35-not-caught, which is a bit ironic since I treat myself as IR35-caught and even I don't confuse my client with my employer.)

[IR35 Avoider]

That is not correct, I'm afraid.

Would be of general help if you could say why you believe this. (Personally I don't care, as I never claim.)

My source was a tax specialist accountant who usually doesn't sully his hands with anything as mundane as the affairs of contractors. He just mentioned it in passing as a possibility, so it may not have been something he had researched or confirmed himself.

Having said that, and having visited the HMRC documentation, I would definitely not get involved in being too clever with travel expenses. You have to be extra careful if using an umbrella. Also, here were bits of Inland Revenue documentation which seemed to imply that they didn't care who your legal employer was, that if you were seconded to a particular site then they would sometimes regard that site as your employer. (Can't remember where I saw this, I think it was their internal manuals that came up in Google.)

[VectraMan]

I can tell you from personal experience that switching employers (i.e. umbrella to Ltd.) doesn't reset the 10,000 mile limit for claiming 40p per mile, because travel allowance is a personal thing and nothing to do with who you work for. I'd be suprised if the same principle doesn't apply to all aspects of travel expenses.

[Hoff]

So overall, what choices do I have?

• Stick with Parasol and pick up less after 2-years
• Change to another umbrella
• Change to managed limited
• Get paid through the agency

[VectraMan]

So overall, what choices do I have?

• Stick with Parasol and pick up less after 2-years
• Change to another umbrella
• Change to managed limited
• Get paid through the agency

All of the above, but it won't make any difference either way (IR35 not withstanding).

[Hoff]

I've been emailing Parasol about this and I've got a clear response...

Having looked through your details, you are not as yet in breach of the 2 year rule.

Contract - Start date - 04-04-2005 - 29-07-2005
Contract - Start date - 02-08-2005 - 02-05-2006

These contracts only cover 12 months.

So should you have a contract set up covering periods 03-05-2006 - 31-03-2007, then this would not take you over the 2 year rule, as the system calculates this to contract to cover 10 months.
However should you have another contract set up , which states end date 04-04-2007 then this would take you up to the 2 year rule and as soon as we were aware of this your account would be blocked from claiming schedule e claims.

[MrsGoof]

thats right.

The moment you know your going to be on site > 2 years then wave goodbye to schedule e expenses.

[DaveB]

Alternativly you can talk to the client / agency and point out that you are losing your allowable expenses and negotiate a rate increase to compensate.

[Hoff]

Alternativly you can talk to the client / agency and point out that you are losing your allowable expenses and negotiate a rate increase to compensate.

Good point.

Parasol have forgotten that I had 4 month contract previous to the 2 they mentioned - which is good, another 4 months of tax allowances.