Reply to: Closing old company / starting a new one

[MarkT]

The risk of getting caught for tax evasion just so you can claim some mileage. Hmmm let me think...

Tax evasion isn't what this is, not for a moment.

The holier than thou attitude on here is astonishing.

We all need to pay the taxes we are legally bound to pay, however with grey rules like the 24 month rubbish and what happened with the claw back, no wonder people are trying to make their own interpretations.

[northernladuk]

2 years in one gig, maybe not that many - but over 2 years in "Manchester City Centre" or "Canary Wharf", probably quite a few

Well spotted to being it back to the geographical area!

[pr1]

Indeed but take in to account how many contractors stay in a gig over 2 years, and then how many flaunt the rule.

2 years in one gig, maybe not that many - but over 2 years in "Manchester City Centre" or "Canary Wharf", probably quite a few

[northernladuk]

Realistically, probably - if you have the money to hand ready to give them as soon as they ask then I agree the risk is very low



Could be talking about savings into the £1000s so it is worth trying to understand the risk, especially given how much of a grey area it is - how many people really understand this rule properly? Has anyone ever been given a tax penalty for misclaiming their travel/mileage with respect to the 24 month rule? I've never heard of it (in which case the only risk is the interest)

Indeed but take in to account how many contractors stay in a gig over 2 years, and then how many flaunt the rule. You are looking at a pretty small number of people. Does that reduce the risk or if only one in that small percentage gets investigated do a high majority get caught? And how do we know how many people have been pulled up about it. It's hardly going to hit the news.

There is then the risk of other action. Getting investigated isn't fun and who knows what else you've been ignoring. They'll go through your business with a fine toothed comb. IR35 investigations are purportedly started from other investigations and you are sitting there with over 2 years at a client. Tasty.

I guess it's down to risk profiles I guess. Potentially exposing myself and my company to all that just to claim expenses is way outside of mine. Each to their own.

[pr1]

All correct that the clock doesn't reset, but if a company is dissolved, how would HMRC be able to look back and see what has been claimed in the past? After 6 years you have no reason to keep anything, so how can they prove/disprove anything?
Yes in the short term it's a dodgy thing to do without doubt, but over time, the risk goes away.

Realistically, probably - if you have the money to hand ready to give them as soon as they ask then I agree the risk is very low

The risk of getting caught for tax evasion just so you can claim some mileage. Hmmm let me think...

Could be talking about savings into the £1000s so it is worth trying to understand the risk, especially given how much of a grey area it is - how many people really understand this rule properly? Has anyone ever been given a tax penalty for misclaiming their travel/mileage with respect to the 24 month rule? I've never heard of it (in which case the only risk is the interest)

[northernladuk]

The risk of getting caught for tax evasion just so you can claim some mileage. Hmmm let me think...

[MarkT]

All correct that the clock doesn't reset, but if a company is dissolved, how would HMRC be able to look back and see what has been claimed in the past? After 6 years you have no reason to keep anything, so how can they prove/disprove anything?
Yes in the short term it's a dodgy thing to do without doubt, but over time, the risk goes away.

[Lance]

He'd have to wait for the average of the past 2 years to come down to 40% though.

I've been 2@home & 3@site (i.e. 60%) for years so haven't been able to claim travel (120 miles/day) but a year or so ago I went 3@home & 2@site (40%) so will soon be able to start claiming - hopefully... I mean given how complicated this all becomes.

Yes. I think that's how it works. Albeit a grey area at that stage.

On another grey blurry note.
Let's say you travel from Leeds to London daily. London is your temporary place of work. Just before you break 24 months you move to Bristol. On face value I'd argue that the temporary place of work becomes permanent anyway, but others talk about the journey, which has no changed completely. I presume that HMRC win either way though.

[ChimpMaster]

3@home & 2@site is exactly 40%.
What about when you aren't available (holidays etc.) that should seal the 40% for you.

He'd have to wait for the average of the past 2 years to come down to 40% though.

I've been 2@home & 3@site (i.e. 60%) for years so haven't been able to claim travel (120 miles/day) but a year or so ago I went 3@home & 2@site (40%) so will soon be able to start claiming - hopefully... I mean given how complicated this all becomes.

[stek]

So, if I were to move to Spain and fly back to London for all my gigs, I wouldn't be a UK tax resident so therefore the ruling wouldn't apply anyway. Rather a drastic approach to avoid it mind.

You would certainly be UK tax resident. 91 day rule for a kick off...

[oliverson]

What Lance says but it's not really a big place for the purposes of the rule. It's hotly debated and one of the grey areas on here but many journeys are not significantly different in time and cost. We get people that argue the tube fare is 6 quid more or overall distance is 10 miles more. Try arguing with someone that lives in Manchester and works in Birmingham that that is significant.

So, if I were to move to Spain and fly back to London for all my gigs, I wouldn't be a UK tax resident so therefore the ruling wouldn't apply anyway. Rather a drastic approach to avoid it mind.

[northernladuk]

I used to think I'd be OK with the 2 year rule on current gig but now I'm not sure. I work three days a week from home, two days a week client site. The ruling says 40% or more so I'm right on the waterline. Would it be enough to say I work 7 hours on client site and 8 at home to push it over the edge? Plus, I'm sure this has been asked before but London is a big place. Is it really the same location if I'm in the City for one gig and Canary Wharf for another? I'd be renting the same accommodation either way so I'm guessing it will be. Whatever the answers I don't think it's going to impact me because I'm probably quitting contracting before the 2 year rule on current gig (maybe sooner if the Autumn budget reveals more clangers for contracting).

What Lance says but it's not really a big place for the purposes of the rule. It's hotly debated and one of the grey areas on here but many journeys are not significantly different in time and cost. We get people that argue the tube fare is 6 quid more or overall distance is 10 miles more. Try arguing with someone that lives in Manchester and works in Birmingham that that is significant.

[oliverson]

3@home & 2@site is exactly 40%.
What about when you aren't available (holidays etc.) that should seal the 40% for you.

Interesting. i'd not thought of it like that (term of 'placement' at temporary site), I was thinking, albeit incorrectly, on a weekly basis. I've also spent 7 months of this gig working 6/7 day weeks, with only ever 2 days at client site.

[Lance]

I used to think I'd be OK with the 2 year rule on current gig but now I'm not sure. I work three days a week from home, two days a week client site. The ruling says 40% or more so I'm right on the waterline. Would it be enough to say I work 7 hours on client site and 8 at home to push it over the edge? Plus, I'm sure this has been asked before but London is a big place. Is it really the same location if I'm in the City for one gig and Canary Wharf for another? I'd be renting the same accommodation either way so I'm guessing it will be. Whatever the answers I don't think it's going to impact me because I'm probably quitting contracting before the 2 year rule on current gig (maybe sooner if the Autumn budget reveals more clangers for contracting).

3@home & 2@site is exactly 40%.
What about when you aren't available (holidays etc.) that should seal the 40% for you.

[oliverson]

Sadly this is all too common. It's a very complicated rule what with all the grey areas but the basics are pretty clear. It's all about location. If there is no significant change to the journey then the clock carries on ticking. This is explicitly covered here

https://www.gov.uk/hmrc-internal-man...anual/eim32080



People often forget if they leave a perm role in say Leeds and take up a contract in Leeds they are already caught.... as it goes on location. So starting a new company up won't work.

I used to think I'd be OK with the 2 year rule on current gig but now I'm not sure. I work three days a week from home, two days a week client site. The ruling says 40% or more so I'm right on the waterline. Would it be enough to say I work 7 hours on client site and 8 at home to push it over the edge? Plus, I'm sure this has been asked before but London is a big place. Is it really the same location if I'm in the City for one gig and Canary Wharf for another? I'd be renting the same accommodation either way so I'm guessing it will be. Whatever the answers I don't think it's going to impact me because I'm probably quitting contracting before the 2 year rule on current gig (maybe sooner if the Autumn budget reveals more clangers for contracting).