Reply to: Expenses

[Bluebird]

Having read the above is it possible to form a new Ltd company and accept the contract that would have take you over the 2 year period ?
So the new company wouldn't have had any dealings with the client?

I doubt it, but thought I would put it out there for others to shoot down

No.

It's not about the company - it's about you and where you work.

If you worked direct for a client and they changed hands, that doesn't reset the 24 month clock either.

[Bluebird]

Quick question gents, as this was not really answered in the post that I started.
As I have to rent somewhere away from home, wil this alo stop at the or the knowing of the 2 year mark, even though I have moved locations, (well 2 miles away)

Cheers

John

Yes,
It's all about being at a "temporary" workplace - once your workplace is no longer regarded as tempory - you can't claim travel or subsistance...

[FiveTimes]

Having read the above is it possible to form a new Ltd company and accept the contract that would have take you over the 2 year period ?
So the new company wouldn't have had any dealings with the client?

I doubt it, but thought I would put it out there for others to shoot down

[welshman213]

Quick question gents, as this was not really answered in the post that I started.
As I have to rent somewhere away from home, wil this alo stop at the or the knowing of the 2 year mark, even though I have moved locations, (well 2 miles away)

Cheers

John

[TheFaQQer]

so in affect,it was a new contract in the eyes of the tax man

So he's already had an investigation and got through it? I'll bet he hasn't!

The key is being in the same location for more than two years - this is not "having the same contract", "working for the same client", "working for the same umbrella", "having a new reference number".

It has been held before that working in The City for more than two years for any number of clients constitutes a permanent place of work, and so no travel expenses were allowed.

Consider:
Contract1 - working through Umbrella1, for Client1 at 1 The High Street, My Town for 18 months

Contract2 - working through Umbrella2, for Client2 at 2 The High Street, My Town on a 9 month contract.

As soon as he starts the second contract, he knows that he will be in the same location for more than two years, therefore cannot claim expenses without constituting tax evasion.

If your friend has done this, and gets caught, then he will be paying up a large chunk of cash, with repayments, penalties and interest.

[NotAllThere]

so in effect,it was a new contract in the eyes of the tax man.

No. If you work through UmbrellaCo1 in the City for 23 months, and then get a contract for 6 months with a new client in the City and work through UmbrellaCo2, your home to office expenses, if paid, are a BIK, and are taxable.

If UmbrellaCo2 are unaware that you're already two years into working in the City, they may well allow the expenses in their calculation of your pay. But the IR won't, and if you get investigated you run the risk of being done for tax evasion.

NotAllThere.

[The Rig]

i know location is the key, but so is the 2 year deal,his contract had a new date on it/reference number etc so when he went to new umbrella it was a different number to the old one, so in affect,it was a new contract in the eyes of the tax man.this was pure luck,he tried it and thats what happened.so he says anyway

he was with prosperity 4 before LOL

[TheFaQQer]

surely,if you were a bit naughty,join a new umbrella company after 24 mths.

i know a chap who did this because of this exact reason,been on site 3 yrs,his umbrella are a bit slow (were).

If he's still claiming expenses, then he's stuffed if there's an investigation.

It has nothing to do with your employer, or even the end client - it's all to do with the LOCATION that you are working. Changing your umbrella is not going to enable you to claim expenses if you are in the same location for more than two years.

[LisaContractorUmbrella]

surely,if you were a bit naughty,join a new umbrella company after 24 mths.

i know a chap who did this because of this exact reason,been on site 3 yrs,his umbrella are a bit slow (were).

Unfortunately moving to another umbrella company won't help. The 24 month rule applies to your place of work and not your employer's location.

[The Rig]

surely,if you were a bit naughty,join a new umbrella company after 24 mths.

i know a chap who did this because of this exact reason,been on site 3 yrs,his umbrella are a bit slow (were).

[eddiegee]

get setup under an umbrella. sjd, Danbro, and many others etc can help you with this, or carry on with your LTD but move to another assignment quickly to aviod IR35.

Although its unlikely, the last thing you need is HMRC to investigate! .

[XLMonkey]

The rules are explained in some detail here

http://www.hmrc.gov.uk/manuals/senew/SE32075.htm
and here
http://www.hmrc.gov.uk/manuals/senew/SE32080.htm

a rare case of HMRC giving clear guidance.

[Bluebird]

Alright guys,
I understand that after 2 years of working on the same (and first) assignment, you cannot claim expenses anymore, is this true and if so what do you think the best alternative is to max my income? I have my Ltd company at the moment but there is not much confidence with IR35 compliancy so I need an alternative now?

Would appreciate your help, cheers

SlickFrog

1. It's at the point that you know you will be on-site for longer than 24 months that you can no longer claim expenses NOT when 24 months have expired [although they may be one and the same], so if you've been on site for 18 months, and they offer you a 12 month extension which you accept, it's then that you can't claim expenses anymore. However, if you are not on site permanently there is a pro-rata rule, and if you are only on site 40% of the time, then you can claim expenses indefinately.

2. If you are INSIDE Ir35, then I guess that you are paying full whack PAYE [or should be], to max your income as suggested before you need a new contract at a new client which is IR35 friendly - you could then take home 75-80% of the amount you invoice...

[TheFaQQer]

Either bump up your rate accordingly, or leave and find another contract.

[r0bly0ns]

The 2 year rule only applies if you spend more than a certain amount of your work time at that location (50% I think).

Once you know that the post will last longer than 2 years then it is deemed your permanent place of work and nothing more.
As far as I know this has no implication on the IR35 status of the contract.