Reply to: 24 month rule: how exact?

[NotAllThere]

That's not a problem. You call them pretending to be a contractor that you don't like.

[blacjac]

Unfortunately there are no hard and fast rules. The only thing you can do is phone the HMRC and ask them.

Then hope that the phone call doesn't put you on "the list"

[NotAllThere]

In such a case, it could be argued that his journey between home and work has not substantially changed over the ten years. And therefore he's stitched. If there's no case law as a guide, then you just have to decide if it's worth the risk of losing in court - because that's where it would be decided. I can't see it going in favour of the contractor though.

[ookook]

If i understand it correctly, you want to continue to live in Manchester and for the company to pay your rent there when your temporary workplace moves to Liverpool.


If that is the case then I reckon the 24 month rule would be reset as Birmingam to Manchester is a considerably different journey than Birminham to Liverpool (as said above).

However, in an investigation the inspectors would almost definately question why your company is renting you a place in Manchester when you live in Birmingham and are temporarily working in Liverpool. They would probably not see the rental as "Wholey and exclusively" for business, as if it were you would have rented in Liverpool.....

That's one of the points I was discussing earlier - if I rented a place in Wigan which inbetween both cities then what would their stance be?
Does "wholly and exclusively" mean that I have to rent a place right next to the office? or with in a 5 miles radius? I guess these rules aren't defined clearly.

What about a guy incorporated in Scotland / Newcastle who rents in a place like Surrey and works all over London and M4 Corridor? If he works for 10 years and changes physical location every 2 years - does that mean he also has to hop around and rent flats near whatever part of London /Home Counties he's working in? Surely he has established a rental accomodation purely for business purposes?

[blacjac]

If i understand it correctly, you want to continue to live in Manchester and for the company to pay your rent there when your temporary workplace moves to Liverpool.


If that is the case then I reckon the 24 month rule would be reset as Birmingam to Manchester is a considerably different journey than Birminham to Liverpool (as said above).

However, in an investigation the inspectors would almost definately question why your company is renting you a place in Manchester when you live in Birmingham and are temporarily working in Liverpool. They would probably not see the rental as "Wholey and exclusively" for business, as if it were you would have rented in Liverpool.....

[slackbloke]

This makes sense - but I'm more interested in the question of whether I could continue to claim accomodation expenses if my physical location changes to Liverpool (and resets the 24 month clock) but my rented accomodation remains in Manchester. I dont really want to rent a place in Liverpool when I can simply drive the 30 miles there and back.

I would intepret the rules as reseting the clocking. These are the two main criteria to be a substantial change :

* the journey an employee has to make to get to work and, in particular,
* the cost of that journey.

and changing from Birmingham/Manchester to Birmingham/Liverpoll would probably meet the criteria of substantial. I would have thought were the accomodation is is irrelvant as you still have a change of work location.

[ookook]

The 24 month rule applies to your actual physical location i.e. the place that you turn up to for work each day. A change in location has to be 'significant' (alhtough the revenue do not define this) in order for the 24 month clock to reset itself

This makes sense - but I'm more interested in the question of whether I could continue to claim accomodation expenses if my physical location changes to Liverpool (and resets the 24 month clock) but my rented accomodation remains in Manchester. I dont really want to rent a place in Liverpool when I can simply drive the 30 miles there and back.

[slackbloke]

Govt would argue in court (if it came to that) that signing a contract gave you a reasonable expectation of working it to completion. They have it all sewn up.

Don't think they even need to argue it, it is part of the regulations :

http://www.hmrc.gov.uk/manuals/eimanual/EIM32083.htm

As you say, they have it well and truly sewn up.

[TheBigYinJames]

I've always reckoned that if I'm outside IR35 (ie no or very short notice period) I don't "know" I'm going to be on site until 1yr 51weeks or even 1yr 364 days. No doubt there is some small print somewhere that deals with that though.

Govt would argue in court (if it came to that) that signing a contract gave you a reasonable expectation of working it to completion. They have it all sewn up.

[moorfield]

Such a pants rule this. I've never seen any write ups of this being enforced.

So what can happen if you "forget" to apply the 24 month rule and subsequently get "caught"? Slapped wrist and backdated BIK? Followed by a full blown IR35 investigation?

Any linkys anyone?

I've always reckoned that if I'm outside IR35 (ie no or very short notice period) I don't "know" I'm going to be on site until 1yr 51weeks or even 1yr 364 days. No doubt there is some small print somewhere that deals with that though.

[LisaContractorUmbrella]

The 24 month rule applies to your actual physical location i.e. the place that you turn up to for work each day. A change in location has to be 'significant' (alhtough the revenue do not define this) in order for the 24 month clock to reset itself

[ookook]

The 2 year rule is based on the area you work so in case 1 you could not claim after the move.
Your second and third cases make no sense. It is based on where you physicaly turn up. Claiming for any other location is a criminal offence.
For case 2. If you turn up in Liverpool then you can claim expenses to Liverpool. If you turn up in Manchester you can not claim after the 2 years, or once you knew it was going over 2 years.

Maybe I should clarify the questions since they make perfect sense to me.

In case 2 - If I rent a house in Manchester and my base is Birmingham. Can I continue to claim expenses for the accomodation when my place of work changes and I drive to Liverpool and back every day to work? Forgetting about mileage expenses for now.
If not, then on what basis are the geographical rules applied? If I rent a house in Wigan then I'm equidistant more or less to both cities. So when my geographical place of work changes from Manc to Liverpool could I continue to claim accomodation expenses? Whats the requirement to be geographically close to a place of work? 5 miles? 10 miles? next door?

Case 3

I might as well just repeat the question: How is the location of work defined?
If I was working in the Northwest on three different sites and alternating between them on a daily basis- using a central base in the northest for accomodation (and claming expenses for it) then my physical location would alter constantly. How would it be defined by the Revenue?

[The Lone Gunman]

On a related note; can anyone advise on the following situations? In relation to the status of my being able to claim expenses for living accomodation etc

Assuming my company registered in Birmingham.

1) I work in Manchester for 2 yrs then transfer to another office of clientco in the same city

2) I work in Manchester for 2 yrs then transfer to another office of clientco in Liverpool but want to keep my temporary location in Manchester because I dont mind the short commute

3) Which is the relevant section that would be examined for evidence of my presence in a location? Is it the office assigned in my contract (if there is one)? If there isnt one then what stops people claiming to be working in various parts of the country to avoid the cessation of expenses claims?

The 2 year rule is based on the area you work so in case 1 you could not claim after the move.
Your second and third cases make no sense. It is based on where you physicaly turn up. Claiming for any other location is a criminal offence.
For case 2. If you turn up in Liverpool then you can claim expenses to Liverpool. If you turn up in Manchester you can not claim after the 2 years, or once you knew it was going over 2 years.

[ookook]

On a related note; can anyone advise on the following situations? In relation to the status of my being able to claim expenses for living accomodation etc

Assuming my company registered in Birmingham.

1) I work in Manchester for 2 yrs then transfer to another office of clientco in the same city

2) I work in Manchester for 2 yrs then transfer to another office of clientco in Liverpool but want to keep my temporary location in Manchester because I dont mind the short commute

3) Which is the relevant section that would be examined for evidence of my presence in a location? Is it the office assigned in my contract (if there is one)? If there isnt one then what stops people claiming to be working in various parts of the country to avoid the cessation of expenses claims?

[max]

Thanks for this thread, I hadn't appreciated that the rule worked exactly this way. Dodged a bit of a bullet refusing the extension offered on my last gig as that would have firmly put me over 2 years.
Mind you my office location had changed 3 times so the geographical element might have saved my bacon.

Is your travel expense substantial relative to your contract income?

I've never heard of anyone ever getting collared for it...probably does happen ..I guess. But hardly the worst thing we do.