Reply to: Expenses - 2 year rule

[Old Greg]

8 miles is not significant in any book. Percentage wise maybe but it's 8 miles. The rule was designed to help people with relocation expenses with 2 years being a reasonable time for someone to decide if they were permanent or not. This isn't an issue with an 8 mile change. You have to bear in mind the examples talk about geographic areas, which 8 miles isn't. I think you would be pushing to argue that with HMRC.

Fortunately you are wrong.

The journey is different. The cost is different. The examples talk anout the significance of these factors. The change in journey is not an artificial construct to avoid the 24 month rule.

The purpose of the rule does not drive the application of the rule. Otherwise we'd all be screwed over IR35. Of course HMRC may disagree but isn't that the same with IR35?

[worzelGummidge]

HMRC state:

"The new workplace must be geographically different to the previous workplace or
there must be a significant change to your daily commute to be entitled to claim travel
and accommodation expenses"

so,
The workplace must be "geographically different" or "a significant change to your daily commute"

If you have proof to either then I would carry on claiming.
I would keep the "evidence" though along with a statement of your reasoning.
I would not bother asking my accountant because they would only offer an opinion.

If you know of any case law then that would be very useful.

[LisaContractorUmbrella]

Should I dig out the link to my workplace meals thread?

I think the bridge example is good for highlighting that distance isn't the important factor.

The problem with rules like this is that they are hard to define precisely (hence the endless debates on this forum) and you can only provide so many examples. That said, it would be nice if HMRC provides a few more examples relevant to contractors.

You are assuming that HMRC want to make things simpler - it's in their interests to have things like this ill defined - whether or not a journey is 'significantly' different to another is totally subjective which is why it always causes so many arguments on here

[TheCyclingProgrammer]

Good stuff from TheCyclingProgammer as always.

Should I dig out the link to my workplace meals thread?

I think the bridge example is good for highlighting that distance isn't the important factor.

The problem with rules like this is that they are hard to define precisely (hence the endless debates on this forum) and you can only provide so many examples. That said, it would be nice if HMRC provides a few more examples relevant to contractors.

[northernladuk]

Good stuff from TheCyclingProgammer as always but....

It is interesting that the only example that is similar to the questions we get about close offices but different journey is the one about the bridge...

Travel expenses: travel for necessary attendance: safeguards against abuse: changes to a workplace: example

In this example the worker has no choice but to travel the long way to get to the other side. No mention is made about the type of transport or personal choices he has. I cannot believe for one minute that the personal choices of transport to a site is any concern of the HMRC. If you travel by car to one site and then train to another site but these are only a couple of miles apart but the car journey to both is comparable then the deciding factor on whether you pay tax on it cannot be down to personal choice surely. Your preferred of transport arrangement is your choice so I can't see how that can affect your tax position. That would blow the doors wide open for abuse.

But anyway, TCP's advice is the way to go.

[TheCyclingProgrammer]

Sounds like a significantly different journey to me. If it's also going to significantly affect the cost of the journey, then I'd keep on claiming it.

People on here will argue the toss over the 24 month rule for ages (I'm also guilty of it) and there are plenty of old threads you can dig through. Remember the key is this: it's not the change in distance, it's the overall effect on the journey and the cost. Quoth HMRC:

The basic principle is that a change in the location or the boundaries of a workplace will be recognised as a change of workplace where the change has a substantial effect on:

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

On the subject of distance:

In practice you should recognise the change of workplace in all cases except where the change has made no significant difference to the commuting journey.

Where these conditions are met the new location is a new workplace even if it is close to the old workplace.

My interpretation of the above is that unless the journeys are clearly not significantly different, then HMRC will give you the benefit of the doubt. It's helpful to remember the motivation behind the rule - it's not put in place to stop people genuinely changing their temporary workplace from claiming travel expenses - as the title of the HMRC manual suggests ("Safeguards against abuse") it's there to stop people from taking the piss.

That said, I'd recommend the pragmatic approach. Assuming you've read through what HMRC have to say on the subject [1]:

* Decide if *you* think the journey is significantly different. It sounds like you think it is. Will it cost you much more?
* Ensure that in the event of an HMRC compliance check, if asked, you could justify your decision.
* Ask your accountant for their opinion and see if it matches yours.
* If you and your accountant agree, keep claiming.
* If you and your accountant don't agree, it's still your decision - refer to my first two points.
* Get on with work and stop worrying about it.

In the unlikely event that you undergo a compliance check (you've got a PCG membership right?), and it's questioned, *and* you are unable to convince Hector, then you'll owe some tax/NI. But assuming you've followed my advice above, you probably won't have a problem.

[1] EIM32280 - Travel expenses: travel for necessary attendance: safeguards against abuse: changes to a workplace

[tarbera]

Bromley.

I currently commute by train direct from the south coast to Croydon. Road traffic up the A23 past Gatwick into south London is a nightmare and I wouldnt want that car journey every day if there is an alternative. The relocation is to Bromley. No direct trains. I would therefore go into and out of London. A lot more expensive and a lot more time. I would have therefore to consider driving to Bromley via M23 / M25 to keep to a reasonable commute time and cost. Not good but preferable to the train journey which would not be acceptable

in morning is a nightmare by car add an hour for the last 10 miles, I would get Fast Train to victoria, then fast train every 15 mins to bromley south, then a short walk to the office.

[billridley]

Never expected the Spanish Inquisition.
Thanks for your responses. Food for thought. Cheers

[northernladuk]

Put yourself in Hector's place. Could you argue that the locations are pretty much the same (client, mode of transport etc are all irrelevant unless it makes arguing the case easier for HMRC).

If the answer is yes you could then you have something to think about, if you honestly could not argue it with a straight face then carry on claiming.

particularly in the day and age of people travelling up and down the country and spending hours on commutes, global working yadda yadda. Needs to be in perspective if you are gonna get it past them.

[MyUserName]

Put yourself in Hector's place. Could you argue that the locations are pretty much the same (client, mode of transport etc are all irrelevant unless it makes arguing the case easier for HMRC).

If the answer is yes you could then you have something to think about, if you honestly could not argue it with a straight face then carry on claiming.

[SueEllen]

The only argument is that the current location makes it sensible to go by train, whereas the new location does not. However, HMRC makes no case for that being a factor.

Having looked at routes from the south coast to these places on Google Maps (I have no idea where they are - somewhere in northern France?), I think I would either (a) stop claiming and push for an increase; or (b) continue claiming and hope that I wasn't investigated.

I wouldn't want to try to argue it with HMRC that the journey is significantly different, but someone might be able to make a case of it.

I would be happy to but then I know those parts of London. Personally I would not walk 8 miles but TFL thinks it's ok to tell people to walk 2.5 miles or 50 minutes.

[DirtyDog]

8 miles is not significant in any book. Percentage wise maybe but it's 8 miles. The rule was designed to help people with relocation expenses with 2 years being a reasonable time for someone to decide if they were permanent or not. This isn't an issue with an 8 mile change. You have to bear in mind the examples talk about geographic areas, which 8 miles isn't. I think you would be pushing to argue that with HMRC.

The only argument is that the current location makes it sensible to go by train, whereas the new location does not. However, HMRC makes no case for that being a factor.

Having looked at routes from the south coast to these places on Google Maps (I have no idea where they are - somewhere in northern France?), I think I would either (a) stop claiming and push for an increase; or (b) continue claiming and hope that I wasn't investigated.

I wouldn't want to try to argue it with HMRC that the journey is significantly different, but someone might be able to make a case of it.

[northernladuk]

This. No-one here knows whether you'd be able to argue the case or not - half will say yes and half will say no. So - have a think about it, see what's been said in the past, read the rules and examples, and talk to your accountant. With all that done, decide whether you continue to claim or not, and stick to it.

I agree!!!

[DirtyDog]

I currently commute by train direct from the south coast to Croydon. Road traffic up the A23 past Gatwick into south London is a nightmare and I wouldnt want that car journey every day if there is an alternative. The relocation is to Bromley. No direct trains. I would therefore go into and out of London. A lot more expensive and a lot more time. I would have therefore to consider driving to Bromley via M23 / M25 to keep to a reasonable commute time and cost. Not good but preferable to the train journey which would not be acceptable

If you feel that you could argue with HMRC that the journey is significantly different, then continue to claim it. If you don't, then stop claiming now and sort out an increase to cover your costs if you choose to extend.

This thread will descend in to a bun fight as every other thread with the same question (of which there have been plenty). Most recently was Psychocandy's I think. Use the search as described in the thread below to go find them. After that speak to your accountant and see what he is comfortable with and then make your mind up.

This. No-one here knows whether you'd be able to argue the case or not - half will say yes and half will say no. So - have a think about it, see what's been said in the past, read the rules and examples, and talk to your accountant. With all that done, decide whether you continue to claim or not, and stick to it.

[northernladuk]

I agree with what you say (apart from the bit about disagreeing with me) - if the journey is significantly different, then claim; if not then don't.

8 miles may be significantly different, for example

• You are only comparing total distance, and they are in completely different directions
• The original distance is short - eg. it was 2 miles and now it is 10 miles

Just changing the mode of transport isn't enough, though, I agree. I think that the one with the most argument is an OG thread, possibly.

8 miles is not significant in any book. Percentage wise maybe but it's 8 miles. The rule was designed to help people with relocation expenses with 2 years being a reasonable time for someone to decide if they were permanent or not. This isn't an issue with an 8 mile change. You have to bear in mind the examples talk about geographic areas, which 8 miles isn't. I think you would be pushing to argue that with HMRC.