Reply to: 2 year rule

[damo111176]

That's certainly the way I understood it to be. Essentiallly HMRC's view is that if you travel to the same small area to work for more than two years, it's not exactly a temporary workplace any more. YourCo can still pay for the travel, of course, it's just that you have to pay tax on it, so it's still a bit of a saving.

Thats what I thought, guess its similar to people claiming expenses they don't actual incur etc , many will do it and many will get away with it. I'll sleep easy.

[THEPUMA]

That's certainly the way I understood it to be. Essentiallly HMRC's view is that if you travel to the same small area to work for more than two years, it's not exactly a temporary workplace any more. YourCo can still pay for the travel, of course, it's just that you have to pay tax on it, so it's still a bit of a saving.

I don't understand. How is it still a bit of a saving?

[malvolio]

So who's right, I was under the impression that 2 years at the same location regardles of change of position or contarct put it as a perm workplace?

That's certainly the way I understood it to be. Essentiallly HMRC's view is that if you travel to the same small area to work for more than two years, it's not exactly a temporary workplace any more. YourCo can still pay for the travel, of course, it's just that you have to pay tax on it, so it's still a bit of a saving.

[damo111176]

Someone I know expects their contract to roll over the 2 years with the same end client at the same location.

The contract is set as the clients head office not the loval office he attends. He has been advised by other colleagues that they have carried on claiming subs and mileage regardless of being with the company over 2 years as a contractor. He believes that becauise he has had his contract reworded, notice period extended and a few other things that he has reset the 2 years yet will still continue to attend the same office.

So who's right, I was under the impression that 2 years at the same location regardles of change of position or contarct put it as a perm workplace?

[ASB]

By-the-way, and only as I was talking about it - does having 2 concurrent contracts mean I'm more or less untouchable as to IR35 status?

Initially the paymaster general stated that the whole picture would be looked at. But unsurprisingly this didn't make it into the legislation.

As stated it's a contract by contract basis - but remember that the contract being assessed is not the one you have signed, simply one that is inferred from the arrangements.

In the event that this is a marginal then the whole picture should be considered in determining status and in this circumstance multiple concurrent contracts might be a point away from IR35.

[Old Greg]

I don't think it's complicated: you are suffering from poor advice, that's all...

Also, you can continue to claim expenses, the only difference is that you will have to pay tax on them as a benefit in kind, so there's not really much point in claiming them. The logical thing to do though is work them out as a proportion of your income and when you get the fateful renewal that blows the 24 months, ask for a proportionate rate increase.

As for how long you are there, surely it is a sign of a well run business that a client wishes to retain your services for an extended period - which incidetnally was one of the arguments used by the 9 year guy...

Thanks for that - I probably have had poor advice but I still maintain it's complicated (a temporary place of work can be 2 separate places with different employers within the square mile?), but that's what my accountant should be sorting out for me.

[TheFaQQer]

By-the-way, and only as I was talking about it - does having 2 concurrent contracts mean I'm more or less untouchable as to IR35 status?

No. IR35 is assessed on a contract by contract basis, so having two makes no difference.

[Bluebird]

Some useful info here. It seems my local gig will take up about 80% of my time, my London gig only 20%. Therefore as my London gig is below 40% I will always be able to claim for travel/hotels/meals.

What I need to do now is get a 3rd concurrent gig, and make my split 35/35/30 and then I'll always be able to claim everything for ever.

By-the-way, and only as I was talking about it - does having 2 concurrent contracts mean I'm more or less untouchable as to IR35 status?

depends on the working arrangements for each contract.

If you worked in McDonalds and did a paper round does that make you NOT an employee ?

[rawly]

Some useful info here. It seems my local gig will take up about 80% of my time, my London gig only 20%. Therefore as my London gig is below 40% I will always be able to claim for travel/hotels/meals.

What I need to do now is get a 3rd concurrent gig, and make my split 35/35/30 and then I'll always be able to claim everything for ever.

By-the-way, and only as I was talking about it - does having 2 concurrent contracts mean I'm more or less untouchable as to IR35 status?

[malvolio]

...

I suppose I'll ask my accountant again and point them in this direction. It's annoying when you can't rely on advice cos it's all so incredibly complicated.

I don't think it's complicated: you are suffering from poor advice, that's all...

Also, you can continue to claim expenses, the only difference is that you will have to pay tax on them as a benefit in kind, so there's not really much point in claiming them. The logical thing to do though is work them out as a proportion of your income and when you get the fateful renewal that blows the 24 months, ask for a proportionate rate increase.

As for how long you are there, surely it is a sign of a well run business that a client wishes to retain your services for an extended period - which incidetnally was one of the arguments used by the 9 year guy...

[Old Greg]

Booklet 490 provides comprehensive advice. See below.

I'm pretty sure Malvolio is right on this occasion as I vividly recall there being an example in this booklet of someone who worked as a banker in the City of London and moved from one employment to another, continuing to work with the square mile. The example stated that this was treated as a single continuous period of employment.

http://www.hmrc.gov.uk/helpsheets/490.pdf

Thanks thepuma and asb. The example (for those who don't want to llok it up):

Eloise, a computer consultant, is the only employee of a company which 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 work at a bank close by on Cheapside for 17 months. Eloise is not entitled to tax relief for her travel from home to these workplaces, because the nature of her work is such that she expects to work continuously in the ‘Square Mile’ albeit on the premises of different banks. So her travel from home to work will be broadly the same every day, year in year out (see paragraph 4.6).

I suppose I'll ask my accountant again and point them in this direction. It's annoying when you can't rely on advice cos it's all so incredibly complicated.

[chris79]

I don't know why I've ended up with this assumption about the 2 year rule and dividends in my head, but that's good news for me then because I thought technically in 12 months from now I'd be a lot worse off.

[gingerjedi]

Malvolio, that's interesting and in direct contradiction to what my accountant told me (they said if the employer changes but the temporary workplace stays the same, then the 2 years resets). I'll now get it in an email from them and take it from there. I'm a bit away from worrying about it now, but it's always good to know all the facts.

It would be interesting to hear some accountant’s views on this please.

Also when the employer changes does this mean the agency or the end client? Does this make a difference?

[THEPUMA]

for some reason I thought that after 2 years you automatically fell inside IR35, and as such dividends were no longer an option? ...

Can I assume now after what's been said here that all that will happen is after 2 years I cannot claim expenses? ... if so that will put a big smile on my face as I don't claim very many anyway

My contract is very much OUTSIDE IR35 just for the record, but I do know off the record that there could be as much as 5 years work in the pipeline, but the contract I'm offered is always 6 months rolling.

Correct the 2 year rule just prevents you from claiming travel, subsistence and accommodation expenses.

There was a case of a guy who had spent 9 years at the same place (albeit slightly complicated circumstances) who was held not to be caught by IR35.

[chris79]

for some reason I thought that after 2 years you automatically fell inside IR35, and as such dividends were no longer an option? ...

Can I assume now after what's been said here that all that will happen is after 2 years I cannot claim expenses? ... if so that will put a big smile on my face as I don't claim very many anyway

My contract is very much OUTSIDE IR35 just for the record, but I do know off the record that there could be as much as 5 years work in the pipeline, but the contract I'm offered is always 6 months rolling.