Umbrella Contract - Occasional Travel to Client Site

[supersteamer]

Reviewing a possible inside IR35 contract at the moment. Client only accepts working through umbrellas.

I have worked inside before, but many years ago when it was through my Ltd and T&S was still allowable.

The work is remote with possibly 2-3 days/month at the client site. The client site is about as far away from where I live as possible without going abroad, and costs a fortune to get to and stay over. I thought that since it's a temporary workplace T&S would still be allowable but the brollies I've spoken to says that T&S expenses are not allowed. Full stop. One went on about SDC but that's a complete tangent as far as I'm concerned. Another said something about travelling between multiple sites but again that's not relevant.

I'm just saying this monthly journey wouldn't be considered normal commuting if carried out by an employee (whether they are wearing a disguise or not).

Travel and subsistence expenses for workers engaged through 'employment intermediaries' from 6 April 2016 - GOV.UK (www.gov.uk) says:

"There are a number of criteria for determining if a workplace is temporary or permanent, but in general a workplace will always be a permanent workplace if the worker:

• goes to the same workplace in the course of a period of continuous work which lasts or is likely to last more than 24 months, or
• goes to the same workplace for all or almost all of the time for which the worker is likely to hold (or continues to hold) the same employment - EIM32125"

Well, it's not continuous, it's less than 24 months, and I won't be there all or almost all of the time.

So why can't I claim T&S to go there? Are there any brollies which allow me to claim this?

Thanks!

[eek]

You only solution is to separate those costs out and get the client / agency to pay them separately even if it means reducing the day rate slightly

Since 2016 umbrellas have not been able to offer expenses and if you are inside IR35 the sane approach for an umbrella is to say no.

[northernladuk]

I'm just saying this monthly journey wouldn't be considered normal commuting if carried out by an employee (whether they are wearing a disguise or not).

But an employee wouldn't claim tax relief on a journey. Their employer would pay for it. So no T&S benefits allowable. You are mixing contracting with employees with all this temp and perm site. It doesn't exist for a perm, it's just what is agreed in the contract.

If it was agreed work from home then you could try get the client to pay for the trips to the site but I think you've already answered that question when you mention the mix of site and home. You are expected to be on site so it's up to you to get there. Just because it's further it's an issue to you, if it was only an hour away you wouldn't be questioning the tax situation (which hasn't changed just because it's further). Don't get sucked in to thinking the tax/T&S situation has changed just because it's further.

[ladymuck]

How would you define normal commuting?

What about someone who lives on the south coast and works on the North Sea rigs? They have to 'commute' up there and back for each period they're scheduled on site for.


As NLUK says, the time, distance and cost of your journey to the client site is irrelevant. If the client expects you to be on site and won't pay for it then you either walk away from the contract or suck it up.

I presume this is an issue because the time and cost incurred for the 2-3 days a month on site wipes out every penny you earn for the 17-18 days a month you're not on site meaning you'll actually be losing money and unable to pay your bills?

[supersteamer]

How would you define normal commuting?

It doesn't really matter how I define it. It's how HMRC define it. I thought that was the whole point of the temporary / permanent workplace definition that I'd quoted from the employment intermediaries document. What's the point of defining this distinction if it's not used for anything?

What about someone who lives on the south coast and works on the North Sea rigs? They have to 'commute' up there and back for each period they're scheduled on site for.

I know a few people who have worked on the rigs. None had to pay for flights out of their post tax salary.

As NLUK says, the time, distance and cost of your journey to the client site is irrelevant. If the client expects you to be on site and won't pay for it then you either walk away from the contract or suck it up.

Sure, legally, the distance and cost is irrelevant but in terms of my income it certainly isn't irrelevant. Yes, if it was a bus trip 2 miles down the road once a month I'm hardly going to bother phoning round umbrella companies to try to reclaim 50p, but I could if I was being pedantic, since the principal is the same.

The client was actually very surprised when I said that I couldn't reclaim tax on the travel to their HQ. They said they have a few support technicians inside IR35 who sometimes need to go round various remote sites in their own car at their own expense, and claim back the tax on travel and subsistence when they were away from the HQ (I must find out which umbrella they are with...)

I presume this is an issue because the time and cost incurred for the 2-3 days a month on site wipes out every penny you earn for the 17-18 days a month you're not on site meaning you'll actually be losing money and unable to pay your bills?

Yes, the fuel for my private jet doesn't come cheap. It's not a binary thing though - it's not as if I'd make a profit if it was claimable and a loss if it wasn't, but when comparing the bottom line of one contract with another it does make sense to factor in any tax mitigations, and was surprised to find that there doesn't appear to be one.

[northernladuk]

It doesn't really matter how I define it. It's how HMRC define it. I thought that was the whole point of the temporary / permanent workplace definition that I'd quoted from the employment intermediaries document. What's the point of defining this distinction if it's not used for anything?

It is. It's used for outside contractors. You will be an employee so intermediaries is not for you.

Sure, legally, the distance and cost is irrelevant but in terms of my income it certainly isn't irrelevant. Yes, if it was a bus trip 2 miles down the road once a month I'm hardly going to bother phoning round umbrella companies to try to reclaim 50p, but I could if I was being pedantic, since the principal is the same.

You are right it isn't irrelevant to your income so you need to make a decision on whether this is finacially viable or not. If not you leave it. Many people left their gigs with all this hit as it just wasn't viable to be onsite and inside. It's the way it is.

The client was actually very surprised when I said that I couldn't reclaim tax on the travel to their HQ. They said they have a few support technicians inside IR35 who sometimes need to go round various remote sites in their own car at their own expense, and claim back the tax on travel and subsistence when they were away from the HQ (I must find out which umbrella they are with...)

You need to becareful mentioning it to clients. Your tax problems are not their issue. Sounds like you've got away with it this time but I'd take what they say with a pinch of salt. The tax situation of those technicians are none of their business either so I'd be surprised if they know the ins and outs. The brolly with won't make a difference.
I believe they'll be claiming against their tax code as a business expense that is not paid for by their employer but they are claiming it because they have to travel to do their job. You don't. You are commuting to your office.

It's pretty black and white and affects EVERYONE inside IR35. No expenses so if it's not financially viable to take the gig you don't take the gig.

[hobnob]

The client was actually very surprised when I said that I couldn't reclaim tax on the travel to their HQ. They said they have a few support technicians inside IR35 who sometimes need to go round various remote sites in their own car at their own expense, and claim back the tax on travel and subsistence when they were away from the HQ (I must find out which umbrella they are with...)

I did something similar in a previous role (inside IR35). Basically, my client was an MSP on the opposite coast. So, travel between my home and their office (and local accommodation) came out of my net salary. However, if I needed to visit their clients, I'd claim that in expenses (45p per mile). The key point is that these expenses were on top of my daily rate: there was an extra section for that when I filled in my weekly timesheets, so the umbrella just passed that on to the client. The umbrella weren't splitting up my actual salary.

Coming back to your main issue, I appreciate that it's annoying for this to put a big dent in your income, but I don't think there's any way round it. In my case, it was worth it: I'd been on the bench for a couple of months, and couldn't find anything locally, so I had to cast a wider net. I wound up camping mid-week for the first few months to keep my costs down, then shifted to a Travelodge later.

[ladymuck]

For employees, there is a way to get tax relief on expenses where they are not reimbursed by their employer - they fill in a SATR at the end of the tax year.

Have you considered doing that?

https://www.gov.uk/tax-relief-for-employees

[eek]

For employees, there is a way to get tax relief on expenses where they are not reimbursed by their employer - they fill in a SATR at the end of the tax year.

Have you considered doing that?

https://www.gov.uk/tax-relief-for-employees

Won't work as this is the equivalent of an employee going to their main place of work.

It's why I said the OP needs the client / agency to treat it as a claimable expense that they explicitly pay separately (reducing the day rate to reflect those estimated costs) as it's the only way you can get round it.

I know the OP says that the other contractors were able to claim money for visiting other clients and other sites but that is because they aren't visiting their main place of work.

And we've had variations of this in the past (there is an old post about a student being taxed on their paid for journey to Newcastle from London) - unless the money is explicitly paid as an expense by the end client and your contract says you are a fully remote worker with a home base you need to pay tax on journeys to you main office base.

Finally, Post Covid HMRC are going to be very tight on this because they will need to be.

[eek]

Also I notice that CUK has an article this morning from Crawford Temple (Professional Passport) regarding Umbrellas, SDC and expenses. Umbrella contractor expenses guide to Supervision, Direction or Control (contractoruk.com)

I will note one bit from there

Where there is a determination that a role is ‘inside IR35’ many will take a view that you are subject to SDC, even though the tests are different.

Beyond that - if an umbrella is offering expenses, be very careful of the gift horse they are offering you and make sure you 100% trust that umbrella.

And personally, I can't think of one umbrella that offers the type of scheme needed that I could trust.