2 year guidance on contract lengths

[bob52]

When I started contracting I was told by a couple of recruiters that it is unwise to contract for longer than 2 years as that increases the likelihood of an IR35 investigation by HMRC. As my contract is due to hit the 2 year mark in just over a week I was hoping if someone on here knew if that was really the case?

[NotAllThere]

Twaddle. What matters is the contract and working practices.

2 years affects your ability to claim T&S expenese.

[northernladuk]

If you don't understand why the agent is wrong then you really need to brush up on IR35. They are wrong with the hard stop at 2 years but spending any length of time at a client and not understanding how to keep your working practices outside could put you in a risky situation well before two years.

Remember the 24 month rule means you stop claiming when you know you are going to go over 24 months, not at the day of the 2 years. If your last 6 month contract ends 24 months and 2 days after you started then you can't claim any of the 6 months.

Don't forget if you've been working in the same geographical area as this gig you add thst as well.

[bob52]

If you don't understand why the agent is wrong then you really need to brush up on IR35. They are wrong with the hard stop at 2 years but spending any length of time at a client and not understanding how to keep your working practices outside could put you in a risky situation well before two years.

Remember the 24 month rule means you stop claiming when you know you are going to go over 24 months, not at the day of the 2 years. If your last 6 month contract ends 24 months and 2 days after you started then you can't claim any of the 6 months.

Don't forget if you've been working in the same geographical area as this gig you add thst as well.

Thanks. In this current situation they want to extend my by 2 weeks which will push me 1 day over the 24 month rule. Assume this means for the 2 week period I just can't claim travel expenses?

[northernladuk]

Thanks. In this current situation they want to extend my by 2 weeks which will push me 1 day over the 24 month rule. Assume this means for the 2 week period I just can't claim travel expenses?

Correct, and anytime after.

That is assuming you are working in a new geographical area for this gig. If you worked for 2 years in Manchester before this gig then you can't claim for anything in this gig. The rule works for geographical area, not by client. If your next gig after this one is in the same area then you can't claim for anything in that one either. Make sense?

[JohntheBike]

Correct, and anytime after.

That is assuming you are working in a new geographical area for this gig. If you worked for 2 years in Manchester before this gig then you can't claim for anything in this gig. The rule works for geographical area, not by client. If your next gig after this one is in the same area then you can't claim for anything in that one either. Make sense?

just to counter your opinion with my actual experiences, I have a letter from HMRC which states that if there is a site move of greater than 10 miles, then the clock is reset. It makes no mention of the same geographical area. I had started a contract in Longbridge, moved to Redditch, then Solihul, then Gaydon then Whitley, then Coventry and finally Warwick. So on the basis of the letter, the clock reset with each move.

[mudskipper]

just to counter your opinion with my actual experiences, I have a letter from HMRC which states that if there is a site move of greater than 10 miles, then the clock is reset. It makes no mention of the same geographical area. I had started a contract in Longbridge, moved to Redditch, then Solihul, then Gaydon then Whitley, then Coventry and finally Warwick. So on the basis of the letter, the clock reset with each move.

Are you able to share a copy of the letter please? (with personal details redacted)

[northernladuk]

just to counter your opinion with my actual experiences, I have a letter from HMRC which states that if there is a site move of greater than 10 miles, then the clock is reset. It makes no mention of the same geographical area. I had started a contract in Longbridge, moved to Redditch, then Solihul, then Gaydon then Whitley, then Coventry and finally Warwick. So on the basis of the letter, the clock reset with each move.

The problem is the rule is very grey and if your letter is true it is the first concrete statement I think we've ever seen. The rule states significant change in journey. I'd argue Redditch to Solihull, depending on exactly where is not really that significant but it definitely falls in to the grey area where there is no clear answer.

It's easier to start with geographical area and the delve in to the detail later. If one gig is in Manchester and the second is also by start with geographical then you are gonna have to dig deeper. If it's Manchester then Leeds you don't. It's just a rule of thumb to open discussion.

To be fair the bridge example shows geographical isn't always true but for those that don't fully understand its a good start.

[northernladuk]

And what MS says.

[northernladuk]

just to counter your opinion with my actual experiences, I have a letter from HMRC which states that if there is a site move of greater than 10 miles, then the clock is reset. It makes no mention of the same geographical area. I had started a contract in Longbridge, moved to Redditch, then Solihul, then Gaydon then Whitley, then Coventry and finally Warwick. So on the basis of the letter, the clock reset with each move.

Digging a bit deeper then I wouldn't trust the ink on that piece of paper as it flies in the face of HMRC's own guidance.

Their website says..

Section 339(7) ITEPA 2003
An employee may change his or her workplace without that change having any substantial effect on his or her journey to work. If a change of workplace does not have any substantial effect on the employee’s journey, or the expense of that journey, the change is ignored for the purposes of

Your 10 miles could be 5 miles one way from your home and 5 the other. In which case there is no substantial effect on the journey therefore their own guidance on 10 miles is wrong.