Reply to: 2 year guidance on contract lengths

[northernladuk]

/care

[JohntheBike]

So failing Section 339(7) ITEPA 2003 and the geographical area actually helped clear it up.



Yet you'll stand by a single comment embedded in documentation that's clearly not following policy???



But thanks for your input in to this thread. It's been a great help

"So failing Section 339"

well, not according to the inspector who was investigating my expenses. The extra tax was due for other reasons.

"Yet you'll stand by a single comment embedded in documentation that's clearly not following policy?"

yes, if I'd been challenged at a later date.

"But thanks for your input in to this thread. It's been a great help"

make of it what you will, I'm just relating my experiences.

Just to give you a flavour of the investigation and HMRC's bullying, they slapped a tax bill on me for "wrongly" claimed expenses, which exceeded the total value of the expenses claimed. Naturally, this incensed me greatly and eventually HMRC accepted a settlement which was in the region of 20% of their original claim. During the investigation, the inspector made many mistakes and accused me of tax evasion, which I countered with documents. One of the mistakes he continually made was to quote my company name incorrectly. Ultimately, the inspector in question was "demoted" or something like that, according to my accountant. One interesting tactic was that he brought with him to all the interviews the most gorgeous creature that I've ever seen in my life. Very disarming!

and, as I've repeatedly indicated, the area director advised the inspector not to investigate me under IR35, as a result of losing my ET case.

[northernladuk]

I was based just outside Birmingham throughout the period of moves, although living in South Wales.

So failing Section 339(7) ITEPA 2003 and the geographical area actually helped clear it up.

known aggressive approach to HMRC at that time

Yet you'll stand by a single comment embedded in documentation that's clearly not following policy???

Also, I'd only ever refer to the letter again on a personal basis and would be very reluctant to use it to demonstrate HMRC policy.

But thanks for your input in to this thread. It's been a great help

[JohntheBike]

Digging a bit deeper then I wouldn't trust the ink on that piece of paper as it flies in the face of HMRC's own guidance.

Their website says..



Your 10 miles could be 5 miles one way from your home and 5 the other. In which case there is no substantial effect on the journey therefore their own guidance on 10 miles is wrong.

yes, but I guess you need to view my later post regarding the circumstances. It clearly is a grey area and some might construe that given my known aggressive approach to HMRC at that time, the inspector might have back tracked to get some extra tax from me, which he did. Also, I'd only ever refer to the letter again on a personal basis and would be very reluctant to use it to demonstrate HMRC policy.

[JohntheBike]

Are you able to share a copy of the letter please? (with personal details redacted)

It is embedded in a large file of documents stored in my loft, so that wouldn't be easy. However, I guess you should refer to my later post regarding the surrounding issues.

[JohntheBike]

If you lived smack in the middle of those, eg Kenilworth, then I could see that being OK because each is a change in journey direction...edit; actually, arguably the move from Whitley to Coventry is the same journey.
However, forgive me, but without proof (ie seeing your letter) I'll defer to my accountant on the matter.

bear in mind that the letter was a statement from a local tax inspector during an investigation into my expenses claims regarding my personal circumstances, so may not be HMRC general policy. I was based just outside Birmingham throughout the period of moves, although living in South Wales.

[Guesstimator]

just to counter your opinion with my actual experiences, I have a letter from HMRC which states that if there is a site move of greater than 10 miles, then the clock is reset. It makes no mention of the same geographical area. I had started a contract in Longbridge, moved to Redditch, then Solihul, then Gaydon then Whitley, then Coventry and finally Warwick. So on the basis of the letter, the clock reset with each move.

If you lived smack in the middle of those, eg Kenilworth, then I could see that being OK because each is a change in journey direction...edit; actually, arguably the move from Whitley to Coventry is the same journey.
However, forgive me, but without proof (ie seeing your letter) I'll defer to my accountant on the matter.

[northernladuk]

just to counter your opinion with my actual experiences, I have a letter from HMRC which states that if there is a site move of greater than 10 miles, then the clock is reset. It makes no mention of the same geographical area. I had started a contract in Longbridge, moved to Redditch, then Solihul, then Gaydon then Whitley, then Coventry and finally Warwick. So on the basis of the letter, the clock reset with each move.

Digging a bit deeper then I wouldn't trust the ink on that piece of paper as it flies in the face of HMRC's own guidance.

Their website says..

Section 339(7) ITEPA 2003
An employee may change his or her workplace without that change having any substantial effect on his or her journey to work. If a change of workplace does not have any substantial effect on the employee’s journey, or the expense of that journey, the change is ignored for the purposes of

Your 10 miles could be 5 miles one way from your home and 5 the other. In which case there is no substantial effect on the journey therefore their own guidance on 10 miles is wrong.

[northernladuk]

And what MS says.

[northernladuk]

just to counter your opinion with my actual experiences, I have a letter from HMRC which states that if there is a site move of greater than 10 miles, then the clock is reset. It makes no mention of the same geographical area. I had started a contract in Longbridge, moved to Redditch, then Solihul, then Gaydon then Whitley, then Coventry and finally Warwick. So on the basis of the letter, the clock reset with each move.

The problem is the rule is very grey and if your letter is true it is the first concrete statement I think we've ever seen. The rule states significant change in journey. I'd argue Redditch to Solihull, depending on exactly where is not really that significant but it definitely falls in to the grey area where there is no clear answer.

It's easier to start with geographical area and the delve in to the detail later. If one gig is in Manchester and the second is also by start with geographical then you are gonna have to dig deeper. If it's Manchester then Leeds you don't. It's just a rule of thumb to open discussion.

To be fair the bridge example shows geographical isn't always true but for those that don't fully understand its a good start.

[mudskipper]

just to counter your opinion with my actual experiences, I have a letter from HMRC which states that if there is a site move of greater than 10 miles, then the clock is reset. It makes no mention of the same geographical area. I had started a contract in Longbridge, moved to Redditch, then Solihul, then Gaydon then Whitley, then Coventry and finally Warwick. So on the basis of the letter, the clock reset with each move.

Are you able to share a copy of the letter please? (with personal details redacted)

[JohntheBike]

Correct, and anytime after.

That is assuming you are working in a new geographical area for this gig. If you worked for 2 years in Manchester before this gig then you can't claim for anything in this gig. The rule works for geographical area, not by client. If your next gig after this one is in the same area then you can't claim for anything in that one either. Make sense?

just to counter your opinion with my actual experiences, I have a letter from HMRC which states that if there is a site move of greater than 10 miles, then the clock is reset. It makes no mention of the same geographical area. I had started a contract in Longbridge, moved to Redditch, then Solihul, then Gaydon then Whitley, then Coventry and finally Warwick. So on the basis of the letter, the clock reset with each move.

[northernladuk]

Thanks. In this current situation they want to extend my by 2 weeks which will push me 1 day over the 24 month rule. Assume this means for the 2 week period I just can't claim travel expenses?

Correct, and anytime after.

That is assuming you are working in a new geographical area for this gig. If you worked for 2 years in Manchester before this gig then you can't claim for anything in this gig. The rule works for geographical area, not by client. If your next gig after this one is in the same area then you can't claim for anything in that one either. Make sense?

[bob52]

If you don't understand why the agent is wrong then you really need to brush up on IR35. They are wrong with the hard stop at 2 years but spending any length of time at a client and not understanding how to keep your working practices outside could put you in a risky situation well before two years.

Remember the 24 month rule means you stop claiming when you know you are going to go over 24 months, not at the day of the 2 years. If your last 6 month contract ends 24 months and 2 days after you started then you can't claim any of the 6 months.

Don't forget if you've been working in the same geographical area as this gig you add thst as well.

Thanks. In this current situation they want to extend my by 2 weeks which will push me 1 day over the 24 month rule. Assume this means for the 2 week period I just can't claim travel expenses?

[northernladuk]

If you don't understand why the agent is wrong then you really need to brush up on IR35. They are wrong with the hard stop at 2 years but spending any length of time at a client and not understanding how to keep your working practices outside could put you in a risky situation well before two years.

Remember the 24 month rule means you stop claiming when you know you are going to go over 24 months, not at the day of the 2 years. If your last 6 month contract ends 24 months and 2 days after you started then you can't claim any of the 6 months.

Don't forget if you've been working in the same geographical area as this gig you add thst as well.