Reply to: Why won't Umbrella accept travel expenses

[LisaContractorUmbrella]

Hi Lisa

Thanks for responding having seen Mal's comment that is what seems to be confusing me

Bless him tbh it is a very confusing and grey area

[The Spartan]

Your intention was still to work more than one assignment through the same employer - circumstances changed that

Hi Lisa

Thanks for responding having seen Mal's comment that is what seems to be confusing me

[LisaContractorUmbrella]

My situation is similar but slightly different in the sense that I only worked one contract under ContractorUmbrella but then I got a contract in Switzerland and have to use an umbrella company here but ContractorUmbrella don't have an office here so I couldn't use them. So where does that put me?

Your intention was still to work more than one assignment through the same employer - circumstances changed that

[The Spartan]

What are the actual chances of being challenged for only working one gig with an umbrella ? And if they did, would the fact that the agency refused to allow me to use my umbrella count in my favour?

My situation is similar but slightly different in the sense that I only worked one contract under ContractorUmbrella but then I got a contract in Switzerland and have to use an umbrella company here but ContractorUmbrella don't have an office here so I couldn't use them. So where does that put me?

[LisaContractorUmbrella]

I now have the scenario that I have been offered an assignment near home, great. Except that if I take it according to Malvolio unless I stick with umbrella and pay "£27 umbrella margin for nowt, it seems I have to repay all the tax saved by claiming home to job mileage. This is 300 miles a week over 13 weeks so quite a lot. To make matters worse even if I opt to stay with the umbrella for a while to increase my number jobs with them from one to two, my agent now tells me they will not work with Contractor Umbrella because they are not on their approved list. What B8llxx. It is just because theyprefer not to have to set up too many umbrellas on their systems.

What are the actual chances of being challenged for only working one gig with an umbrella ? And if they did, would the fact that the agency refused to allow me to use my umbrella count in my favour?

This should be sorted for you now socialworker

[socialworker]

I now have the scenario that I have been offered an assignment near home, great. Except that if I take it according to Malvolio unless I stick with umbrella and pay "£27 umbrella margin for nowt, it seems I have to repay all the tax saved by claiming home to job mileage. This is 300 miles a week over 13 weeks so quite a lot. To make matters worse even if I opt to stay with the umbrella for a while to increase my number jobs with them from one to two, my agent now tells me they will not work with Contractor Umbrella because they are not on their approved list. What B8llxx. It is just because theyprefer not to have to set up too many umbrellas on their systems.

What are the actual chances of being challenged for only working one gig with an umbrella ? And if they did, would the fact that the agency refused to allow me to use my umbrella count in my favour?

[LisaContractorUmbrella]

The “intention” part of this argument is an interesting one. Intention could be very difficult to prove, even if the worker puts in writing that they intend to get another assignment. Workers are at the mercy of the availability of assignments and whether a client chooses to provide them with an assignment. Even if a worker has the intention, they may still not get a second assignment. Or a worker may initially have the intention but, due to a change in personal circumstances, is unable to take a second assignment, or the reverse could be true. As there doesn’t seem to be any clauses in ESM2030 for scenarios based on workers’ intentions, it makes ESM2030 appear all encompassing.

Intention is indeed very difficult to prove but this is HMR&C's wording and such wooliness is quite common

[malvolio]

The “intention” part of this argument is an interesting one. Intention could be very difficult to prove, even if the worker puts in writing that they intend to get another assignment. Workers are at the mercy of the availability of assignments and whether a client chooses to provide them with an assignment. Even if a worker has the intention, they may still not get a second assignment. Or a worker may initially have the intention but, due to a change in personal circumstances, is unable to take a second assignment, or the reverse could be true. As there doesn’t seem to be any clauses in ESM2030 for scenarios based on workers’ intentions, it makes ESM2030 appear all encompassing.

The solution to which is fairly standard. You may start with the intetnion of having a second gig via the umbrella, but if you don't, the tax saving you made by claiming expenses is no longer valid, it becomes a BIK and so should be repaid at year end. To do otherwise is, under the rules of ESM2030, simply evasion.

[Sue]

Is it not the case that it is your intention to work at more than one workplace that allows you to claim to and from place of work mileage under an umbrella? I thought HMRC would have to show that you intended only to do one gig under your umbrella co. in order to challenge you.

I have been doing one gig for 3 months and claiming mileage as it was my intention that I would be contracting for some time and would be doing another gig after the first one ended. Roger Westlake is my person at contract Umbrella and he is ex HMRC so i trust his judgement. I also have emails to show I looked for alternative gigs when the first was about to end, even though in the event I was offered an extension to the first one. I am hoping that I therefore can evidence that I had the intention to work at different temporary places of work even if in the event I ended up working for the same client on the second assignment.

Contractor Umbrella have just sent me a form to sign to say that I am looking for a second assignment to work at under them, no doubt this not only avoids them having to pay me minimum wage for being out of work but also is evidence of intention.

I would have thought unless you have shown that you had no intention to do more than one gig for your umbrella, for example you had taken leave of absence of a certain length of time from a permanent employer, and took on an assignment of that length of time, it would be difficult to prove otherwise. If anyone knowledgeable thinks I am wrong though, I would like to know! I am going to make sure I have a different place of work at the next gig though, just to be sure.

The “intention” part of this argument is an interesting one. Intention could be very difficult to prove, even if the worker puts in writing that they intend to get another assignment. Workers are at the mercy of the availability of assignments and whether a client chooses to provide them with an assignment. Even if a worker has the intention, they may still not get a second assignment. Or a worker may initially have the intention but, due to a change in personal circumstances, is unable to take a second assignment, or the reverse could be true. As there doesn’t seem to be any clauses in ESM2030 for scenarios based on workers’ intentions, it makes ESM2030 appear all encompassing.

[socialworker]

Intention

Is it not the case that it is your intention to work at more than one workplace that allows you to claim to and from place of work mileage under an umbrella? I thought HMRC would have to show that you intended only to do one gig under your umbrella co. in order to challenge you.

I have been doing one gig for 3 months and claiming mileage as it was my intention that I would be contracting for some time and would be doing another gig after the first one ended. Roger Westlake is my person at contract Umbrella and he is ex HMRC so i trust his judgement. I also have emails to show I looked for alternative gigs when the first was about to end, even though in the event I was offered an extension to the first one. I am hoping that I therefore can evidence that I had the intention to work at different temporary places of work even if in the event I ended up working for the same client on the second assignment.

Contractor Umbrella have just sent me a form to sign to say that I am looking for a second assignment to work at under them, no doubt this not only avoids them having to pay me minimum wage for being out of work but also is evidence of intention.

I would have thought unless you have shown that you had no intention to do more than one gig for your umbrella, for example you had taken leave of absence of a certain length of time from a permanent employer, and took on an assignment of that length of time, it would be difficult to prove otherwise. If anyone knowledgeable thinks I am wrong though, I would like to know! I am going to make sure I have a different place of work at the next gig though, just to be sure.

[Sue]

This is from HMR&C's own guidance manuals:

ESM2030 - Overarching Contracts of Employment
Background
An overarching contract of employment links together a series of separate assignments so that each location of each assignment becomes a temporary workplace. A temporary worker effectively becomes a permanent employee of the employment business under an overarching contract of employment.

Temporary workers, traditionally engaged under agency contracts and caught by the agency legislation, are not entitled to relief for payment of travel and subsistence expenses, including home to work travel to a client's work premises, as each assignment is deemed to be a separate employment and so each new place of work becomes a permanent workplace.

Many employment businesses and umbrella companies have changed their business model by looking to implement an overarching contract of employment. If it is accepted that contracts are overarching contracts of employment, then each new place of work usually becomes a temporary workplace (subject to the “24 month rule” - see Employment Income Manual EIM32080) and the individuals travel and subsistence expenses would qualify for relief under the travel rules. The employment businesses then apply for a dispensation to include the travel and subsistence payments. (See guidance relating to dispensations in the Employment Income Manual at EIM30050 onwards and in the Compliance Operational Guidance (COG) manual COG907080.


As travel expenses are only allowable once more than one assignment has been linked under an overarching contract a single assignment would automatically become a permanent workplace.

If an overarching contract of employment only comes into effect when there is more than one assignment, then I understand that to mean that a first assignment is only qualified by a second assignment, and 'overarching rights' do not begin when the contractor signs their contract of employment.

If this is the case, when an umbrella company employs a new contractor who is given their first 12 month assignment (or any duration up to 24 months), will the umbrella company refuse to allow the contractor to submit expenses for those 12 months because no second assignment exists to qualify the first assignment?

If this is also the case, but the contractor manages to secure a second assignment soon after, will the contractor then have to submit 12 months’ worth of backdated expenses for the first assignment?

[LisaContractorUmbrella]

This is from HMR&C's own guidance manuals:

ESM2030 - Overarching Contracts of Employment
Background
An overarching contract of employment links together a series of separate assignments so that each location of each assignment becomes a temporary workplace. A temporary worker effectively becomes a permanent employee of the employment business under an overarching contract of employment.

Temporary workers, traditionally engaged under agency contracts and caught by the agency legislation, are not entitled to relief for payment of travel and subsistence expenses, including home to work travel to a client's work premises, as each assignment is deemed to be a separate employment and so each new place of work becomes a permanent workplace.

Many employment businesses and umbrella companies have changed their business model by looking to implement an overarching contract of employment. If it is accepted that contracts are overarching contracts of employment, then each new place of work usually becomes a temporary workplace (subject to the “24 month rule” - see Employment Income Manual EIM32080) and the individuals travel and subsistence expenses would qualify for relief under the travel rules. The employment businesses then apply for a dispensation to include the travel and subsistence payments. (See guidance relating to dispensations in the Employment Income Manual at EIM30050 onwards and in the Compliance Operational Guidance (COG) manual COG907080.


As travel expenses are only allowable once more than one assignment has been linked under an overarching contract a single assignment would automatically become a permanent workplace.

[Sue]

The one that defines a permanent workplace. Expenses are for the costs of getting to a temporary workplace, if you're only doing one gig with an umbrella you don't have one.

I've heard this argument before about one contract making a workplace permanent, but so far no-one has been able to quote exactly where they got that definition from. The HMRC EIM32080 article says a worker has to be at a location for 24 months plus for it to be permanent.

Which article are you quoting from?

[malvolio]

.

Which HMRC article states that contractors can't claim travel expenses if they only intend to do one assignment?

The one that defines a permanent workplace. Expenses are for the costs of getting to a temporary workplace, if you're only doing one gig with an umbrella you don't have one.

[Sue]

You are absolutely right Moggy - if you only intend to do one assignment with any umbrella company you won't be able to claim for travel expenses as that location automatically becomes a permanent workplace

The HMRC's definition of a temporary workplace doesn't state the above - EIM32075 - Travel expenses: travel for necessary attendance: definitions: temporary workplace. In summary, it states: “A workplace is a temporary workplace if an employee goes there only to perform a task of limited duration or for a temporary purpose.”. There's no mention of a location becoming permanent if the worker intends to do one assignment.

The HMRC's definition of a permanent workplace - EIM32080 - Travel expenses: travel for necessary attendance: definitions: temporary workplace: limited duration, the 24 month rule. In summary, it states: “a further rule that prevents a workplace from being a temporary workplace where an employee attends it in the course of a period of continuous work that lasts, or is likely to last, more than 24 months…”. If continuous work is undertaken for more than 24 months, the HMRC define that location as permanent in relation to travel expenses.

I know my post is late, but I'm new to this site.

Which HMRC article states that contractors can't claim travel expenses if they only intend to do one assignment?