24 Month Rule - Final Answers Please!!!

[CliveP]

Hi all, I had a long drawn out debate with a contractor colleague last night regarding the 2-year ‘temporary workplace' rule. Can anyone give me a definitive answer as I’ve seen SO many different opinions as to when the 2-year rule is and is not broken?

From the top –

1. I attend the same workplace (Mon – Fri) for 25 months – BROKEN

2. I attend the same workplace (Mon – Fri) for 25 months but clientco have started sending me to a new workplace on Fridays. I have been attending the Friday workplace for less than 2 years and would like to claim travel & subsistence – NOT BROKEN

3. I attend the same workplace (Mon – Fri) for 15 months but sign a 12 month extension to my existing contract with no change in workplace – BROKEN

4. I attend the same workplace (Mon – Fri) for exactly 24 months, take a 6 month break from contracting and then return to the same client (at the same workplace) – NOT BROKEN

5. I attend the same workplace (Mon – Fri) for exactly 24 months, take a 3 month assignment elsewhere in the county and then return to the first client (at the same workplace) after 3 months – NOT BROKEN

6. I attend the same workplace (Mon – Fri) for exactly 24 months, then start a new assignment 3 miles away from workplace of the first client – BROKEN

7. I attend the same workplace (Mon – Fri) for exactly 24 months, this journey takes me 30 mins from my home. I then start a new assignment at a workplace that is again takes me 30 mins my home, but in the opposite direction – BROKEN

8. I work through an Umbrella Company and this is my first assignment. I attend the same workplace (Mon – Fri) for 3 months but then get offered a permanent job and inform my umbrella that i'll be leaving in 6 weeks. I'd still like to claim travel and subsistence expenses for the remainder of this assignment - BROKEN

Many Thanks
Clive

[Malvolio]

Originally Posted by CliveP

Hi all, I had a long drawn out debate with a contractor colleague last night regarding the 2-year ‘temporary workplace' rule. Can anyone give me a definitive answer as I’ve seen SO many different opinions as to when the 2-year rule is and is not broken?

From the top –

1. I attend the same workplace (Mon – Fri) for 25 months – BROKEN

2. I attend the same workplace (Mon – Fri) for 25 months but clientco have started sending me to a new workplace on Fridays. I have been attending the Friday workplace for less than 2 years and would like to claim travel & subsistence – NOT BROKEN

3. I attend the same workplace (Mon – Fri) for 15 months but sign a 12 month extension to my existing contract with no change in workplace – BROKEN

4. I attend the same workplace (Mon – Fri) for exactly 24 months, take a 6 month break from contracting and then return to the same client (at the same workplace) – NOT BROKEN

5. I attend the same workplace (Mon – Fri) for exactly 24 months, take a 3 month assignment elsewhere in the county and then return to the first client (at the same workplace) after 3 months – NOT BROKEN

6. I attend the same workplace (Mon – Fri) for exactly 24 months, then start a new assignment 3 miles away from workplace of the first client – BROKEN

7. I attend the same workplace (Mon – Fri) for exactly 24 months, this journey takes me 30 mins from my home. I then start a new assignment at a workplace that is again takes me 30 mins my home, but in the opposite direction – BROKEN

8. I work through an Umbrella Company and this is my first assignment. I attend the same workplace (Mon – Fri) for 3 months but then get offered a permanent job and inform my umbrella that i'll be leaving in 6 weeks. I'd still like to claim travel and subsistence expenses for the remainder of this assignment - BROKEN

Many Thanks
Clive

There is no final answer, since HMRC refuses to provide one. The general rule is that you stop claiming travel and susbsistence as soon as you know your engagement will last more than 24 months at the same temporary location. the generally accepted interpretation of that is:

"As soon as you know" means just that: if you take a 36 month gig, you can't claim at all, if you aim to go permanent after a three month trial contract, you can't claim at all, if you get a 12 month extension on the end of three 6 months gigs you stop claiming.

"Same temporary location" is anywhere where you take substantially the same journey to work. That is not clearly defined, but most seem to think the Square Mile, for example, is a single location to HMRC. Changing companies to a building next door, for example, doesn't reset the counter.

"Temporary" is anything over 40% of your working time is being spent at that location

Finally the counter is a rolling 24 month period. Taking a break in the middle doesn't necessarily reset it.



Of course, you can claim anything you like. What matters is as soon as you break the above parameters, it becomes a BIK and must be declared as income.

[Beefy198]

The same temporary location part is the bit that gets me. It's so open to interpretation - whilst you could possibly reasonably argue that someone going to separate contracts in the City that are mere metres away isn't substantially changing the journey, when does the journey substantially change?

Going the same distance in the opposite direction?
Having to stay a little longer the train?
Going a tube station further to your contract? Two stops further? Three stops further?

The trouble is that at the end of the day it'll surely often come down to the judgement of the guy looking at the case. And that's dangerous IMO.

[Pistachio]

Does this help?

What is the 24 month rule?

[The SMG]

Originally Posted by Beefy198

The same temporary location part is the bit that gets me. It's so open to interpretation - whilst you could possibly reasonably argue that someone going to separate contracts in the City that are mere metres away isn't substantially changing the journey, when does the journey substantially change?

Going the same distance in the opposite direction?
Having to stay a little longer the train?
Going a tube station further to your contract? Two stops further? Three stops further?

The trouble is that at the end of the day it'll surely often come down to the judgement of the guy looking at the case. And that's dangerous IMO.

Spot on Beefy. A tax inspector in London could well have a different 'interpretation' of a temporary workplace than his equivalent in Manchester and this is where the problem lies. I think the Revenue have made the legislation deliberately ambiguous in an attempt discourage employees from claiming tax free expenses.

G

[CliveP]

Originally Posted by Malvolio

There is no final answer, since HMRC refuses to provide one. The general rule is that you stop claiming travel and susbsistence as soon as you know your engagement will last more than 24 months at the same temporary location. the generally accepted interpretation of that is:

"As soon as you know" means just that: if you take a 36 month gig, you can't claim at all, if you aim to go permanent after a three month trial contract, you can't claim at all, if you get a 12 month extension on the end of three 6 months gigs you stop claiming.

"Same temporary location" is anywhere where you take substantially the same journey to work. That is not clearly defined, but most seem to think the Square Mile, for example, is a single location to HMRC. Changing companies to a building next door, for example, doesn't reset the counter.

"Temporary" is anything over 40% of your working time is being spent at that location

Finally the counter is a rolling 24 month period. Taking a break in the middle doesn't necessarily reset it.


Of course, you can claim anything you like. What matters is as soon as you break the above parameters, it becomes a BIK and must be declared as income.

What's your thoughts on dispensations Malvolio? A good or bad thing?

[curleyted]

Oh, that handy tool that helps umbrella companies market their services you mean?

[Malvolio]

Originally Posted by CliveP

What's your thoughts on dispensations Malvolio? A good or bad thing?

Don't really have a view. They are a handy way to save paperwork but have no real value to a small company: all thay do is set fixed costs for routine expenditure on train fares and the like, agreed in advance with HMRC. You still need to keep receipts anyway.

The Umbrella use is an interesting case of economical truth as well. The Umbrella uses a dispensation so they don't have to account for every last detail of the expenses they reimburse to their workers on their P11D. It does not mean that those workers can claim anything they like; the Umbrella may have a dispensation to allow £10 for every meal claimed, but that doesn't mean the worker can claim £10 for meals unless that is what they've spent.

[Beefy198]

It does not mean that those workers can claim anything they like; the Umbrella may have a dispensation to allow £10 for every meal claimed, but that doesn't mean the worker can claim £10 for meals unless that is what they've spent.

But as I'm sure you're well aware, that's not what they say!

[hugo@gabem]

Originally Posted by Beefy198

But as I'm sure you're well aware, that's not what they say!

That's not what they all say.

And I don't mean to sound like a broken record, but....Any reputable company should still require receipts regardless of their dispensation, it's a very basic level of compliance.

Expense dispensations still perform a few functions for the umbrellas that do play by the rules: Agencies (and a lot of contractors) like umbrella companies to have a dispensation because it's seen as proof of at least a certain amount of compliance, it reduces the amount of paperwork we have to process and send to you, such as the P11Ds, and it also gives us a certain amount of legal protection because it clarifies exactly what expenses contractors can and can't claim for.

Before April if you didn't have a dispensation it was open to interpretation what could be claimed, but with the introduction of the scale rate expenses the playing field has been levelled somewhat.