24 month rule - different example - yes or no?

[paul williams]

Independent consultant working at different clients/sites.

3 Months in Bristol at Client X.
8 Months in Birmingham at Client Y
12 Months in Bristol at Client Z (and just been offered extension for another 3 months).

Seems to be a bit of a grey area in HMRC examples. So where does the 24 month rule where expenses can't be considered apply?

1. Stop when extension to 15 months at client Z is offered because, at this point, its been 24 month since first start of a contract in Bristol (with Client X) and, in those past 24 months minimum (inc the planned extension), then 18/26 months is spend in Bristol which is > 40%.

2. The 8 months in Birmingham at Client Y resets the counter. So OK to claim up until time at client Z until 24 months is exceeded here.

As you can see makes a huge difference. 12 months expenses allowable or not?

 

[Becky]

They seem to be separate projects with different clients, so based on the limited information I would consider each to be a temporary workplace. If you start work on a new project and expect that project to last for less than 24 months, then I would expect that to be a temporary workplace too.

Have you checked out HMRC 490? It's a very handy guide:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/517266/490.pdf

Specifically you need to check Chapter 3.

 

[paul williams]

Yes different clients. Not sure if that matters. General consensus in the IT contracting world is that its location that matters and not the client.

Yes checked that out. Still not clear cut.

 

[Becky]

Are you operating through a limited company? If you are self employed then you are not an employee and different rules apply - based on what you have said it sounds like you are more of an itinerant worker in which case all of your travel would be deductible.

There's an interesting article here:
http://www.taxadvisermagazine.com/article/it-depends…

 

[paul williams]

Are you operating through a limited company? If you are self employed then you are not an employee and different rules apply - based on what you have said it sounds like you are more of an itinerant worker in which case all of your travel would be deductible.

There's an interesting article here:
http://www.taxadvisermagazine.com/article/it-depends…

Thanks. Yes limited company.

 

[Becky]

Ah ok, thanks for the clarification.

Which factors are making you feel that temporary workplace does not apply? It's difficult for me to be able to help you without a lot more information, and I can understand if you don't want to share that here. A good place for more guidance is HMRC's employment income manual, and here's the relevant section:

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim32000