The scenario that the legislators envisaged when drafting the rule was: What about the guy who doesn't spend 24 months at the same place but keeps on turning up like the bad penny. Near Chester there is the Stanlow Oil Refinery - the whole site is about five miles long. Some men word for firms who have contracts all over the country but the men themselves have worked at Stanlow all their lives, and obviously they cannot claim.
However, Stanlow is such a large site that some men move around the country but keep on returning to Stanlow. They don't spend 24 months there at one go but as they keep returning it can happen that over a period of time they spend a substantial amount of their time there.
If over a period of 24 months a person spends 40 per cent or more at the same site then he is not entitled to claim. But he would be from the point when the period in question is more than 24 months.
IT IS IMPORTANT TO NOTE THAT QUITE A FEW HMRC EMPLOYEES DO NOT APPRECIATE THE FINER POINTS OF THIS RULE.
Take the man who has never been to Stanlow in his life. On 6th April 2000 he is sent there for six months and on 6th October 2000 he goes somewhere else for 12 months - on 6th October 2001 he then returns to Stanlow for 12 months.
For 2000/2001 he is OK - there isn't a 24 month period - only 12 months.
For 2001/2002 he is OK - there isn't a 24 month period until 6 April 2002.
As at 6 April 2002 we have a 24-month period - 24 months from when he first went there. In that 24 month period he spent 12 months at Stanlow (i.e. 50 percent of the period) and as he is at Stanlow as from 6th April 2002 he cannot claim as from that date.
This disallowance is not backdated.
There have been cases where the claimant had been at one site for 12 months and HMRC argued that the expense was not allowable because he had been there for 40 percent of the time in a 24 month period. That is incorrect. There has to be a 24 month period similar to the one I have described and the expense becomes non allowable once and from the point at which the period of 24 months is exceeded.
Now I'll introduce a complication. The guy in the example above leaves Stanlow on 5th October 2002 and returns to Stanlow on 6th April 2004. Right - count back 24 months - i.e. back to 6th April 2002. During this 24 month period he has been at Stanlow for six months only - i.e. 25 percent of the period. He can now claim for the trips to Stanlow as from 6th April 2004. But the longer he stays at Stanlow the more the percentage increases. Say he is still at Stanlow on 6th April 2005 - when you count back 24 months from that date he will have been at Stanlow for 50 per cent of the time therefore he cannot claim. You need to identify the point at which he exceeds the 40 percent and from that point he cannot claim.
In practice it is highly unlikely that HMRC will spot this as you are not required to provide extra information unless asked and when HMRC do enquire they normally enquire into one year only so they may not be provided with the full picture. Of course if they are able to enquire into more than one year at the same time (e.g. returns are sent in late) then the full picture may emerge.