Reply to: Accountants liabilities?

[Wanderer]

Now there is the age old argument. I am sure there is an official HMRC doc that gives an example of two places in London and confirms the clock does not reset but don't know the URL.

HMRC Helpsheet 490 Employee travel section 4.7 gives the example of their Julie who "works for an employer who has several offices close to each other in London. Her employer rotates staff around the offices every 18 months. Julie works at one office and is then moved to another. She travels to work using the Underground and, although she now gets off ten stops further on than previously, her journey is largely unaltered and the price of her ticket does not change. Her workplace is not considered to have changed"

Don't know if that matches the scenario here.

[northernladuk]

A question on interpretation though. If I took a six month contract at the east end of the City of London, say near the Tower Bridge part of London, and then took a six month contract at the far west end, say Shepherds Bush/Hammersmith area, is that far enough apart to constitute a break? I'm not sure myself, from my perspective it's a huge distance apart but would HMRC treat anything inside "London" as the same place?

Now there is the age old argument. I am sure there is an official HMRC doc that gives an example of two places in London and confirms the clock does not reset but don't know the URL.

We have also had arguments about this where one direction a guy caught the tube and the other he could ride his bike therefor he argued that is a substantial change in the journey due to the mode of transport and so on.

Ahh here it is
http://www.hmrc.gov.uk/manuals/eimanual/EIM32089.htm

Also thread on a guy that has been caught so an indepth discussion on the London issue.

http://forums.contractoruk.com/accou...ing-badly.html

To me a Londoner wouldn't consider relocation to get another job in London and would consider all of London when looking for 'local' work so you would not exect relocation expenses to reset. There are extremes but that is my take.

[craig1]

When I was using an LLP, I was told the 24 month rule doesn't apply, since you are technically self-employed, anyone confirm/deny?

Now, that's very interesting... I contract through an LLP and I was completely under the impression that it was caught under these guidelines. Having a look at Booklet 490 though, it's very blunt on it being for employees. One for investigation!

That said, I've never got close to triggering the 24 month rule...

A question on interpretation though. If I took a six month contract at the east end of the City of London, say near the Tower Bridge part of London, and then took a six month contract at the far west end, say Shepherds Bush/Hammersmith area, is that far enough apart to constitute a break? I'm not sure myself, from my perspective it's a huge distance apart but would HMRC treat anything inside "London" as the same place?

[SueEllen]

With any luck i will land the contract I have my eye on. It's a straight 12months in Reading. So that will keep me safe, but I really need to get to grips with my accountants appetite for risks

Change accountants and check the new one understands about 24 month rule and anything else you think is relevant to your situation in the coming 2 years.

[bobspud]

If you have read the news you can clearly see that HMRC is targeting every group they can think of to get money out of them, so it's highly unlikely they would come to different opinions.

Hopefully you will get extended to make it 9+ months then it would be clear you aren't caught when you move back again.

With any luck i will land the contract I have my eye on. It's a straight 12months in Reading. So that will keep me safe, but I really need to get to grips with my accountants appetite for risks

[SueEllen]

Yes London is the city in question so by the examples I am royally screwed. But my accountant seems to think not Apparently it's another IR35 type issue where the wiggle room is so large you can give it to 4 inspectors and get 4 different outcomes.

If you have read the news you can clearly see that HMRC is targeting every group they can think of to get money out of them, so it's highly unlikely they would come to different opinions.

Either way it looks like I may have a gig lined up halfway down the M4 to fall back on for 6 months which should solve the problem.

Personally I'd rather not have to find out if I am right or not.

Hopefully you will get extended to make it 9+ months then it would be clear you aren't caught when you move back again.

[Robot]

The accountant should know better, there are enough examples on the 24-month rule, for the accountant to give an opinion.

I know, it is only an opinion but the accountant should know more than most about it.

I also think, the accountant should have a review of the 24-month for each client, bring forward points each year of where the client contracted, to build up a picture over a period of time, to review it and give advice, if the client refuses to listen the accountant should stop acting or do money laundering reports, rather than putting through travel / subsistence which is not allowable for tax purposes.

Accountants have duty of care!!

Robot

[bobspud]

Well we can only hope you're not working the City of London!

Yes London is the city in question so by the examples I am royally screwed. But my accountant seems to think not Apparently it's another IR35 type issue where the wiggle room is so large you can give it to 4 inspectors and get 4 different outcomes.

Either way it looks like I may have a gig lined up halfway down the M4 to fall back on for 6 months which should solve the problem.

Personally I'd rather not have to find out if I am right or not.

[SueEllen]

Well we can only hope you're not working the City of London!

WCS

The example given in the HMRC booklet is for the City of London so neither you or the accountant can claim not to understand that.

[cojak]

Hi,
A asked my accountant about this the other day as I am about to jump ship and the next contract would take me into the 2 year rule around May next year. His argument was as a contractor each contract is a bounded separate engagement, so in effect changing the contract and the office address to the new client will reset the clock... I'm still not sure I would believe him however the firm is rather big and he's not the only accountant say this.

Well we can only hope you're not working the City of London!

[bobspud]

I told him I thought he was already well past 24 months due to X-1, and X, but he just said his accountant says it's cool and it's the workplace that counts.

Hi,
A asked my accountant about this the other day as I am about to jump ship and the next contract would take me into the 2 year rule around May next year. His argument was as a contractor each contract is a bounded separate engagement, so in effect changing the contract and the office address to the new client will reset the clock... I'm still not sure I would believe him however the firm is rather big and he's not the only accountant say this.

[stek]

When I was using an LLP, I was told the 24 month rule doesn't apply, since you are technically self-employed, anyone confirm/deny?

[TraceRacing]

Although all of our arrangement with our respective accountants have a clause in that states the we are ultimately responsible for ensuring things are done correctly from an accounting perspective, I believe that if the accountant gives you duff advice that you have a case against them.

It's called "duty of care" and there is an obligation upon the expert with the responsibility to advise accordingly. As professional contractors, we have a duty of care to ensure that we do not deliberatly do something that would harm our clients business. They are the same. If you can prove the advice given was wrong then you claim against their Professional Liability insurance.

[Martin at NixonWilliams]

May be the wrong title but...

Had a chat with a few of the contractors here about the 24 month rule and hardly surprisingly we have the full mix from those who have never heard of it, those that comply and those that claim anyway believing they will never get investigated.

Interestingly there are some who's accountants swear blind their clock has restarted due to the fact they had a couple of weeks break between contracts. We tried to convince them otherwise and to speak to their accountants again but it seems to no avail.

Without getting in to a discussion about the 24 month rule I was wondering what happens if an accountant puts you in trouble through duff advice or mis understanding of the grey rules we have? If these guys continue to claim and the accountant is wrong, despite the contractors checking a few times, are you on your own or does the accountant have to sholder some responsibility here? The contractor attempted due diligence so does that help?

Lets forget the 'Get a new accountant' line or the argument about the gap in contracts restarting the clock though. This is a general question using the example above. It could be advice that is bordeline but HMRC don't agree etc.

Hi northernladuk

Regardless of where the advice comes from it is ultimately your responsibility (as director for the Limited Company and as an individual for your tax returns etc.) to ensure you maintain compliance at all times with the prevailing tax rules in force and because of this if you are found to be claiming incorrectly etc. any additional tax liability would fall on you (or the company).

If you are found to have additional tax due then you will be liable for interest and penalties. If advice has been taken from an accountant (which turned out to be incorrect) then in my opinion you would have quite a strong case to argue with HMRC that you acted ‘reasonable’ and as such you could get any penalties reduced to nil. However, the interest charge is statutory and would be levied in any case.

You may have a case, depending on the advice given, to sue the accountant for negligence but generally accountants are only offering their advice and it is up to the individual whether they choose to base their decisions on that advice or not, this is due to the fact that nothing (or very few things) in tax law is black and white but grey as with the 24 month rule.

That said, I’m sure that most accountants may be open to negotiating some sort of compensation to cover some or all of the interest charges if their advice was grossly wrong (based on the correct facts being supplied by the client of course).

I hope this helps.

Martin

[jmo21]

May be the wrong title but...

Had a chat with a few of the contractors here about the 24 month rule and hardly surprisingly we have the full mix from those who have never heard of it, those that comply and those that claim anyway believing they will never get investigated.

Interestingly there are some who's accountants swear blind their clock has restarted due to the fact they had a couple of weeks break between contracts. We tried to convince them otherwise and to speak to their accountants again but it seems to no avail.

Without getting in to a discussion about the 24 month rule I was wondering what happens if an accountant puts you in trouble through duff advice or mis understanding of the grey rules we have? If these guys continue to claim and the accountant is wrong, despite the contractors checking a few times, are you on your own or does the accountant have to sholder some responsibility here? The contractor attempted due diligence so does that help?

Lets forget the 'Get a new accountant' line or the argument about the gap in contracts restarting the clock though. This is a general question using the example above. It could be advice that is bordeline but HMRC don't agree etc.

I don't have an answer, but I had a similar conversation with an ex-colleagie.

He was aware of the 24 month rule, decided not to renew contract X on that basis (which I thought was silly anyway), but his next contract X+1 was about 2 miles away and he was planning to continue claiming. His previous contract, X-1 was even closer to X (less than a mile).

I told him I thought he was already well past 24 months due to X-1, and X, but he just said his accountant says it's cool and it's the workplace that counts.