Reply to: 2 year rule..a bit cloudy this one

[Billy Pilgrim]

In my opinion yes it would. At the end of the day you need to decide this for yourself and be willing to defend it to the HMRC if necessary.

Indeed. I just put it to the board to canvas opinion.

Despite the fact that there are guidelines they seem so open to misinterpretation that you can never feel safe.

Interpreted one way you could argue that any contract longer than 10 months would always fall foul of the two year rule since from the moment you sign it you will know that in 10+ months time you would have worked more than 40% of your time in a temporary workplace. Weird

[lje]

But could you class a few meetings as working in London...??? Looking back at my accounts for end of 2008 I make it 5 days out of 3 months that I went to London for meetings...rest of the time was midlands/home based. Would that REALLY start the two year clock??

In my opinion yes it would. At the end of the day you need to decide this for yourself and be willing to defend it to the HMRC if necessary.

[Billy Pilgrim]

The way to calculate it is to look at when you first started working in a particular location. If it was less than 24 months ago (and you expect it to be less than 24 months from the end of your contract) then it is fine to claim the expenses. If it will be more than 24 months from the end of the contract then you can still claim expenses if you have spent less than 40% of the time in that location.

In your inital communications it seemed that it wouldn't be 24 months since you started working in London so that would be fine. Now that you've said that you did some work in London which will take you over the 24 months then you need to look at the overall percentage of time - which will be more than 40% - so you shouldn't claim them.

But could you class a few meetings as working in London...??? Looking back at my accounts for end of 2008 I make it 5 days out of 3 months that I went to London for meetings...rest of the time was midlands/home based. Would that REALLY start the two year clock??

[lje]

Which is where it gets cloudy .. since you could argue that for an initial 15 month contract starting on New Years day 2008 based in Edinburgh for example - where ALL of the work was done in Edinbugh - and then a 10 month extension working in London - then the same situation would apply (i.e. no travel expenses claimable for the london part of the contract) -- since by the end of the extension I would have spent more than 40% percent of my time based in London...and therefore could not claim expenses...now that seems WRONG to me .. and is sort of what you are implying above...

Infact in the above situation I would also not be able to claim expenses for any part of the Edinburgh contract if you followed those rules

(I think )

The way to calculate it is to look at when you first started working in a particular location. If it was less than 24 months ago (and you expect it to be less than 24 months from the end of your contract) then it is fine to claim the expenses. If it will be more than 24 months from the end of the contract then you can still claim expenses if you have spent less than 40% of the time in that location.

In your inital communications it seemed that it wouldn't be 24 months since you started working in London so that would be fine. Now that you've said that you did some work in London which will take you over the 24 months then you need to look at the overall percentage of time - which will be more than 40% - so you shouldn't claim them.

[Billy Pilgrim]

Ah - well that changes things. By the end of your extension you would have spent more than 40% of your time working in London over the previous 24 months and so you cannot claim travel expenses. If you had not spent any time in London between Sept/Dec 08 then you would have a few more months of grace but you did spend some time there and so the 40% rule comes in. Infact if your current contract takes you to beyond September then you shouldn't be claiming travel expenses now.

Which is where it gets cloudy .. since you could argue that for an initial 15 month contract starting on New Years day 2008 based in Edinburgh for example - where ALL of the work was done in Edinbugh - and then a 10 month extension working in London - then the same situation would apply (i.e. no travel expenses claimable for the london part of the contract) -- since by the end of the extension I would have spent more than 40% percent of my time based in London...and therefore could not claim expenses...now that seems WRONG to me .. and is sort of what you are implying above...

Infact in the above situation I would also not be able to claim expenses for any part of the Edinburgh contract if you followed those rules

(I think )

[lje]

95+% of my time between end of September and the end of December / start of Jan was spent either in the midlands OR from home - the rest was London for meetings etc - i.e. the odd day once every other week or so. Going back through my accounts for that year I first started going to London regularly in the second week of 2009 - and have spent 75+% of my time since then down in London

Ah - well that changes things. By the end of your extension you would have spent more than 40% of your time working in London over the previous 24 months and so you cannot claim travel expenses. If you had not spent any time in London between Sept/Dec 08 then you would have a few more months of grace but you did spend some time there and so the 40% rule comes in. Infact if your current contract takes you to beyond September then you shouldn't be claiming travel expenses now.

[Billy Pilgrim]

If you have been working in London since 1st December 2008 and a contract extension would take you to 2nd December 2010 you would be breaking the 24 month rule. To clarify - between Septembe and December was all your time spent in the Midlands or was some of the work undertaken in London?

95+% of my time between end of September and the end of December / start of Jan was spent either in the midlands OR from home - the rest was London for meetings etc - i.e. the odd day once every other week or so. Going back through my accounts for that year I first started going to London regularly in the second week of 2009 - and have spent 75+% of my time since then down in London

[LisaContractorUmbrella]

If you have been working in London since 1st December 2008 and a contract extension would take you to 2nd December 2010 you would be breaking the 24 month rule. To clarify - between Septembe and December was all your time spent in the Midlands or was some of the work undertaken in London?

[SueEllen]

Based 'out of London' - based 'in London' -- both the same thing to me

Meaning that I have been working IN London

Sorry for any confusion on that one

So 40% of your time you are working in London

And 60% where?

Ask to get your contract amended to include the locations you work from in it.

[Billy Pilgrim]

Am I reading this wrong then?? The wording in the OP's initialy question is pretty poor to be honest so god knows what the real situation is. I presume when he says 'out of London' he means based IN London. He is using the same wording as being based out of an office means at that office?????

Based 'out of London' - based 'in London' -- both the same thing to me

Meaning that I have been working IN London

Sorry for any confusion on that one

[northernladuk]

The working conditions in this case are fine - he hasn't been in London for 24 months so he can claim travel expenses.

Been on a contract since September 08 – which was based in the midlands until the end of December 2008 – and then has been predominantly (i.e. significantly more than 40%) based out of London

Am I reading this wrong then?? The wording in the OP's initialy question is pretty poor to be honest so god knows what the real situation is. I presume when he says 'out of London' he means based IN London. He is using the same wording as being based out of an office means at that office?????

[lje]

If HMRC are going to come look at you you need to be squeeky clean. Having a contract that says Midlands but you are spending most of your time in the London area they are going to be all over you like a rash IMO. They don't care what the contract says, they will look at the working conditions.

The working conditions in this case are fine - he hasn't been in London for 24 months so he can claim travel expenses.

[LisaContractorUmbrella]

Sounds about right to me too -- only fly in the ointment now is that my contract (and all renewals) actually specifies the midlands location as my place of work -- but my working practices are actually different - either London or home - hopefully that won't make any difference though

Yep that will make a big difference - as with IR35 - it is your actual working practises that matter and not what it says on your contract

[northernladuk]

If HMRC are going to come look at you you need to be squeeky clean. Having a contract that says Midlands but you are spending most of your time in the London area they are going to be all over you like a rash IMO. They don't care what the contract says, they will look at the working conditions.

[Billy Pilgrim]

Another lazy 2 year rule that has been asked so many times before. Time for a sticky I think??

Indeed.

Was just after a bit of clarification from others before I sign the latest renewal - with my circumstances being slightly different to the norm (i.e. not in same location for all of contract)

I'm glad you could be bothered to reply though - cheers