Reply to: Travel - 24 month rule two clients in central London

[Batcher]

Ok cool. This was part of another investigation though right ? They didn't pull you because you claimed expenses after the 24 month rule. And HMRC lost. So is this not a legal precedent and shouldn't we be quoting your case when queries like this are raised ?

If they investigate you they will investigate everything that you've done going back the previous 24 months and then before that as they'll have found the excuse to do it. They won't just have an investigation into your 24 month status

[northernladuk]

Ok cool. This was part of another investigation though right ? They didn't pull you because you claimed expenses after the 24 month rule. And HMRC lost. So is this not a legal precedent and shouldn't we be quoting your case when queries like this are raised ?

What would you be using the quote for? To show claiming it in this case is right or wrong?

[northernladyuk]

Ok cool. This was part of another investigation though right ? They didn't pull you because you claimed expenses after the 24 month rule. And HMRC lost. So is this not a legal precedent and shouldn't we be quoting your case when queries like this are raised ?

It won't be a legal precedent if it didn't go to court (I would think).

[radish2008]

Yes, me

I worked in Edinburgh at two different clients. The route from my home office to their offices were different, I had 3 months off between contracts and driving from one client office to the other was just over 4 miles.

In my mind that was enough of a break and a difference in location but HMRC (during my IR35 investigation) insisted the Square Mile Rule applied and therefore I should have stopped claiming travel after 24 months.

My investigation went on for 4 years and I eventually, with the help of PCG, got them to drop it so I didn't pay anything back.

The general rule though is the direction of travel is what they will judge you on.

Ok cool. This was part of another investigation though right ? They didn't pull you because you claimed expenses after the 24 month rule. And HMRC lost. So is this not a legal precedent and shouldn't we be quoting your case when queries like this are raised ?

[malvolio]

You would think. 18 months at client 1, 3 months off then started at client 2. They said the clock started ticking when I started at client 1 and the 3 month break wasn't long enough.

There was no mention of the 40% rule either by PCG or HMRC. This was in the early 2000s so it may not have been in place at the time? I can't recall it being mentioned otherwise I would have used it in my defence.

Have you read the first post in the relevant sticky? Start at the anticipated end of the current engagement and work backwards. Your example doesn't do that.

[Batcher]

Bet you looked really good making that argument....

Just as good as they looked to me

[Batcher]

Isn't that what the 40% rule is for?

You would think. 18 months at client 1, 3 months off then started at client 2. They said the clock started ticking when I started at client 1 and the 3 month break wasn't long enough.

There was no mention of the 40% rule either by PCG or HMRC. This was in the early 2000s so it may not have been in place at the time? I can't recall it being mentioned otherwise I would have used it in my defence.

[northernladuk]

Yes, they did. I explained that the 4 miles between offices would be hard to fit into a square mile

Bet you looked really good making that argument....

[Batcher]

I bet they even called it the' Square Mile Rule' instead of the 'Square Mile Example' to illustrate the Rule.

Yes, they did. I explained that the 4 miles between offices would be hard to fit into a square mile

[northernladyuk]

Isn't that what the 40% rule is for?

Quite. The break will be no defence, but the 4 miles difference may (or may not) be.

[northernladuk]

Yes, me

I worked in Edinburgh at two different clients. The route from my home office to their offices were different , I had 3 months off between contracts and driving from one client office to the other was just over 4 miles.

In my mind that was enough of a break and a difference in location but HMRC (during my IR35 investigation) insisted the Square Mile Rule applied and therefore I should have stopped claiming travel after 24 months.
.

Isn't that what the 40% rule is for?

[northernladyuk]

Yes, me

I worked in Edinburgh at two different clients. The route from my home office to their offices were different, I had 3 months off between contracts and driving from one client office to the other was just over 4 miles.

In my mind that was enough of a break and a difference in location but HMRC (during my IR35 investigation) insisted the Square Mile Rule applied and therefore I should have stopped claiming travel after 24 months.

My investigation went on for 4 years and I eventually, with the help of PCG, got them to drop it so I didn't pay anything back.

The general rule though is the direction of travel is what they will judge you on.

I bet they even called it the' Square Mile Rule' instead of the 'Square Mile Example' to illustrate the Rule.

[Batcher]

Somewhere between 0 and 0 I would think.

Can anyone find anyone else (apart from the footballer who's case was dropped after 2 years) that has been asked ?

Yes, me

I worked in Edinburgh at two different clients. The route from my home office to their offices were different, I had 3 months off between contracts and driving from one client office to the other was just over 4 miles.

In my mind that was enough of a break and a difference in location but HMRC (during my IR35 investigation) insisted the Square Mile Rule applied and therefore I should have stopped claiming travel after 24 months.

My investigation went on for 4 years and I eventually, with the help of PCG, got them to drop it so I didn't pay anything back.

The general rule though is the direction of travel is what they will judge you on.

[northernladyuk]

Isn't it what HMRC thinks that counts?

I think you are right though....

I think it is important to differentiate between what is allowed and what HMRC wants you to do. The BET was a good example of the HMRC taking a different view (on IR35 in this case) from what the law states (and intends). HMRC as we all know is not a neutral arbiter on this. They are on the other side and the law is the arbiter.

In this case (a hypothetical case as we don't actually know the OP travels into Liverpool St) we need to look at an example HMRC gives around the square mile (with IIRC no statement about change in method and cost of journey) against another HMRC statement:

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

In this case there is substantial effect on the expense of the journey so the change is not ignored. It is actually clear. The only reason I say is is a grey area is because HMRC will disagree.



Edit: and her is the example:

https://www.gov.uk/hmrc-internal-man...anual/eim32089

Travel expenses: travel for necessary attendance: definitions: temporary workplace: example
A computer consultant is the only employee of a company that she controls. She is a specialist in banking systems. She spends 18 months working full-time at the headquarters of a merchant bank in Lombard Street in the City of London. She then moves next door to design a new computer system for a different bank where she expects to stay working full-time for 22 months. After that assignment she moves to a bank close by on Cheapside for 17 months. The employee expects to work continuously in the City of London albeit on the premises of different banks. Her travel from home to work will be broadly the same every day. No deduction is due for the cost of travel between her home and any of these workplaces.

This example illustrates the effect of the rule in Section 339(7) ITEPA 2003 that requires us to ignore a change of workplace if that change does not have any significant effect on the employee’s journey to work, see EIM32280.

Relevant part is in bold. If you were to expand it to encompass the broader HMRC understanding of change so it said:

This example illustrates the effect of the rule in Section 339(7) ITEPA 2003 that requires us to ignore a change of workplace if that change does not have any significant effect on the employee’s journey to work or the expense of that journey, see EIM32280.

...then in the example I give, there is a clear and significant decrease in the expense of the journey.

[malvolio]

It's the City of London. As far as Hector is concerned, that is one location. Get a gig in Reading, or even Canary Wharf, and you might have a case.