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Sam
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Category: Tax
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Hi. I have just completed a 2 year contract at a location

Resolved Question:

Hi.
I have just completed a 2 year contract at a location (ended Mar 14).
I then was awarded a totally NEW contract, through a different Resourcing Agency (I have my Own Ltd Company and invoice the recording agency accordingly). This contract lasted 7 weeks and was then cancelled as I was offered a better role (different pay level etc) for a further (up to 2 year). These have all however been at the same location.
As I was not guaranteed a new contract I gave up my original temporary accommodation. (my permanent work address is Manchester, the work is in Salisbury). So I had to find new accommodation which has cost me more (I claim my temporary accommodation through my Ltd Company).
My question is. Should I still be able to claim temporary mileage allowance for travelling from my permanent place of work (Manchester) for this totally NEW 2 year contract.
Many thanks
Bryan
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.

Hi Bryan

Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer.

I m am afraid not, as you choose to take this contract on through choice, knowing its location

I should also advise the whilst its fine that the limited company pay for your temporary accommodation, this will not qualify as a tax free position and you will need to ensure that P11ds are completed (on you personally) and a P11db (for the company) so that tax is paid on this benefit when the P11db and P11d is submitted to HMRC year end.

You have two issues that do not permit this to be deemed to be temporary - and therefore tax free

1) the location remained the same so this became your primary work place

2) you accepted the work, both as an individual and as the director of the company at this locations far from your registered office.

I would ask your accountant to fully check the accommodation position in case a breach of tax due arises (and they will be fully equipped with all the facts to this situation)

But I can advise that the mileage can not be paid tax free for the reasons advised above.

Then there is the issue, that looks at whether its appropriate for you to be invoicing through a limited company, as the IR35 legislation states were it not for the limited company would you in fact be an employee of the agency, and if the answer to this seems likely to be "yes" I think you have another issue. However I assume your accountant has looked at this and is satisfied that HMRC legislation is not being breached?

.Let me know if you have any follow questions

Thanks

Sam

Customer: replied 3 years ago.

Hi Sam

Obviously not the answer I was looking for :-( LOL!

What I don't understand in your statement is we are encouraged to 'find work' and as I provide a project management service, this can not always be where your family and therefore 'home' or permanent location is. So yes, I took a position by choice but only because it was the only work available in my chosen profession at the time.

For information:

My company is registered in Manchester.

My role is classed as a Contract Temporary Worker, I get no benefits etc and certainly no courses out of them yet I provide them a specialised service.

All other areas are being covered correctly, Its just the mileage thing makes it look like I am being penalised for finding work. As you can understand, I have to spend the week away from my family and then pay for the privilege of doing so...some things just don't seem fair!

Just to confirm, by taking a position by choice, which is not going beyond 2 years excludes me from claiming?

Thanks again.

Expert:  Sam replied 3 years ago.

Hi Bryan

Thanks for your response

I fully understand your frustration that you go where the work is, which is not always on your door step.

But even for self employed people, accommodation and mileage does not always become an absolute tax free right, But the moment you provide that service to one company in one location you lose the right for HMRC to determine this to be temporary, it becomes permanent, regardless of where your registered office is situated.

So its not just the fact this is a two year (or beyond) position or that its choice, its the fact that this becomes, by default your main base of employment.

For example, if you were to be offered a job with that company (and had many other jobs on the go at the same time) and decided I can spare Monday Tuesday and Wednesday there but have another commitment with another job for Thursday and Friday, so could then offer the following Tuesday and Wednesday to the original job, these would all be treated as temporary - as you do not know from one week to the next where you will be, so all travel and subsistence falls within the temporary requisite.

This does not (and never has) fallen within that requirement - nor as an employee (which you are as well as a director of the limited company) get relocated within a contract which sees you away from home, on a temporary basis - you have that sole choice as director and employee whether to take that particular job on, and its location also falls into that decision made.

I am so sorry if you have been misadvised by your previous accountant - which is unacceptable, but I would certainly take the issue up with him/her for misinformation.

The 480 benefits guide and the Employment Inome Manual - link here is VERY clear on this matter.

http://www.hmrc.gov.uk/manuals/eimanual/EIM32150.htm the basic explanation of temporary

http://www.hmrc.gov.uk/manuals/eimanual/eim32160.htm this link showcases when there is a depot or other base which loosely summarises your position

Fixed workplace - which covers your position http://www.hmrc.gov.uk/manuals/eimanual/EIM32125.htm

This when the 24 month rule is over ridden - and this one summarises your position completely.

I am sorry the news is not more favourable. In these times we have to go where the work is, and it does leave you having additional expenses before you even earn from the job itself - it doesn't help businesses trying to thrive.

But I am sure you appreciate my role within Just Answer (and my own practice) is to be honest with customers rather than secure their business by telling them what they would like to hear only to pay the cost with HMRC later down the line.

Do come back if you have any follow up questions - it would be appreciated if you could rate/accept the response, so I am credited for the work I have undertaken.

Thanks

Sam

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