Reply to: 24 month rule again

[TheFaQQer]

I suggest you go and look up The Ramsay Principle.

HTH

Comes down to the burden of proof, surely. How can someone prove that by negotiating that the client pays for travel expenses in return for a lower daily rate is an attempt to avoid tax rather than a legitimate business negotiation?

If the client picks up the tab for travel, then they have an incentive to reduce the amount of travel you do, in order to save costs. You have an incentive to reduce the travel because you can be near home, plus you remove the uncertainty of any change in cost of travel. Sounds to me like good business practice rather than an attempt to avoid any BIK.

[ASB]

I now have a new contract with a base outside London, but travel to London once a week. The train ticket is paid for by the client and booked through their system. Does a BIK charge arise from this, when it is the client, not my Ltd paying for it?

The work in London has, in my opinion, ceased to be continuous on the face of what you ware saying, as such the 24 month rule has become irrelevant.

A new temporary workplace in Birmingham means the travel to London is now to a different temporary workplace and is not likely to be subject to the 24 month rule. However it is possible it is; think 40% and whether you should be applying a rolling period.

EIM32080 - Travel expenses: travel for necessary attendance: definitions: temporary workplace: limited duration, the 24 month rule

Who or how it is paid for is irrelevant, in practice, since the ticket is being booked by the client it is unlikely that anything will come of it.

[ASB]

It's nothing to do with business travel, it's to do with personal tax liability. If someone pays you travel expenses personally, you have to consider the rules. If they don't - i.e. if they cover the cost themselves or YourCo recovers its costs via an invoice, and no money transfers to your personal bank account, then there cannot be a BIK.

Tosh.

It can still be BIK. Strictly speaking BIK can be provided by anybody to anybody. In practices it's not likely to be reported.

A client could, for example, pay for travel to your temporary workspace by providing a ticket or whatever. The fact that is is paid in this way make no difference at all to whether it is BIK.

[speling bee]

I suggest you go and look up The Ramsay Principle.

HTH

Will let NLUK do it and report back.

[malvolio]

So.... if caught by 24 months, reduce your rate and get client to pay for travel?

I suggest you go and look up The Ramsay Principle.

HTH

[TheFaQQer]

So.... if caught by 24 months, reduce your rate and get client to pay for travel?

That seems to be the implication of this thread, yes.

If you can get someone other than your employer to pay for your travel, then all bets are off, according to the knowledge in the thread. But until an accountant comments, I'd be wary.

<NLUK>Of course, you could ask your accountant and see what they say....</NLUK>

[speling bee]

It is that simple.

Any employer in the UK can pay for an employee to travel to a workplace.

However if that workplace is not a temporary workplace as defined by HMRC then the cost of that travel is a BIK and the employee is taxed for it.

If a client who is not the employer decides to pay for the travel of a worker who isn't their employee then it's a business agreement and is not subject to the same tax treatment.

So.... if caught by 24 months, reduce your rate and get client to pay for travel?

[TheFaQQer]

If a client who is not the employer decides to pay for the travel of a worker who isn't their employee then it's a business agreement and is not subject to the same tax treatment.

If that's the case, what's to stop my company paying the travel for my mate who is over the 24 month rule, and his paying for mine??

Sounds like a nice way to dodge the rule to me.

[SueEllen]

Surely it's not that simple. If myCo buys me a season ticket, I'm still subject to the 24 month rule. No money has transferred to my personal account.

It is that simple.

Any employer in the UK can pay for an employee to travel to a workplace.

However if that workplace is not a temporary workplace as defined by HMRC then the cost of that travel is a BIK and the employee is taxed for it.

If a client who is not the employer decides to pay for the travel of a worker who isn't their employee then it's a business agreement and is not subject to the same tax treatment.

[mudskipper]

It's nothing to do with business travel, it's to do with personal tax liability. If someone pays you travel expenses personally, you have to consider the rules. If they don't - i.e. if they cover the cost themselves or YourCo recovers its costs via an invoice, and no money transfers to your personal bank account, then there cannot be a BIK.

Surely it's not that simple. If myCo buys me a season ticket, I'm still subject to the 24 month rule. No money has transferred to my personal account.

[malvolio]

It's nothing to do with business travel, it's to do with personal tax liability. If someone pays you travel expenses personally, you have to consider the rules. If they don't - i.e. if they cover the cost themselves or YourCo recovers its costs via an invoice, and no money transfers to your personal bank account, then there cannot be a BIK.

[northernladuk]

This bit is hypothetical. I am not trying to determine whether invoicing the client for travel or using their travel system removes the 24 month rule from the occasion. Which would seem very odd to me.

My first impression as that this is adhoc travel and has nothing to do with permanent or temp places of work 24 month rule is irrelevant. If I was over the 24 month rule but client required me to travel to another city for meetings I would stick that in as normal? Where are the accountants of the board when you need them

[speling bee]

Sorry to be pedantic (or maybe I am just being stupid here) but isn't that different to the original scenario where your new location is outside London and you just travel in when required as adhoc travel? Or are you using both locations in London to make your point clearer?

This bit is hypothetical. I am not trying to determine whether invoicing the client for travel or using their travel system removes the 24 month rule from the occasion. Which would seem very odd to me.

[northernladuk]

Thanks SueEllen - that answers my question, but hypothetically...

If I finish one 23 month contract in London with ClientCo 1, and then start another in London with ClientCo 2, and my contract with ClientCo 2 is such that I invoice for travel, have I dodged the 24 month rule?

I.e. assuming an £1000 / month travel cost (£50 / day on a 20 day month), I am better off (if ClientCo 2 will agree) with a daily rate of £450 per day + using their travel booking service, than £500 per day and paying the travel personally (and not being able to reclaim it because of the BIK).

Sorry to be pedantic (or maybe I am just being stupid here) but isn't that different to the original scenario where your new location is outside London and you just travel in when required as adhoc travel? Or are you using both locations in London to make your point clearer?

[speling bee]

No you don't fall foul of the 24 month rule.

It's part of your services to the client which is why you are invoicing that expense.

You need to make sure you put VAT on that expense like the rest of your invoice if you are VAT registered.

If the client isn't happy about you charging VAT then they have to buy the tickets for you themselves and give them to you.

Edited: Due to the problems this has caused I suggest you check with your client if they are happy to pay the VAT or do they prefer to buy the tickets for you in advance.

Thanks SueEllen - that answers my question, but hypothetically...

If I finish one 23 month contract in London with ClientCo 1, and then start another in London with ClientCo 2, and my contract with ClientCo 2 is such that I invoice for travel, have I dodged the 24 month rule?

I.e. assuming an £1000 / month travel cost (£50 / day on a 20 day month), I am better off (if ClientCo 2 will agree) with a daily rate of £450 per day + using their travel booking service, than £500 per day and paying the travel personally (and not being able to reclaim it because of the BIK).