Contractors' Questions: Would being inside IR35 preclude mileage claims?

Contractor’s Question: I’ve been on a contract with the same outfit since 2013. Each year’s been via a 12-month contract. I was at one location for 2.5 years but then they moved offices, so I now work most of the week from home. Can I still claim mileage? I’m concerned that I’m inside IR35 and, if so, would this preclude me from claiming mileage?

Expert’s Answer: The first step is to ascertain whether IR35 applies in relation to the engagement. In the absence of detailed information concerning the working practices, there are some issues concerning the lack of an apparent project basis (i.e. fixed-term 12-month contracts). But the fact that you work from home is a positive indicator of self-employment.

The test for 'travel for necessary attendance' at a client's site (s.339A(3) Income Tax (Earnings and Pensions) Act 2003) depends on whether 'the manner in which the worker provides the services is not subject to (or to the right of) supervision, direction or control by any person'. In plain English, you would need the client to say that it will confirm in writing that it has no right of supervision, direction or control as to how the work is done, nor has attempted to exert such powers. 

The existence of a right of control can be inferred from the facts of the engagement; if the services you are providing are outside of the client's normal activities then it is unlikely that a right of supervision, direction or control exists. Conversely, if you are providing services to a client which specialises in the same field then difficulties may arise. This is particularly problematic where a right of supervision, direction or control is implied by law or professional practice, e.g. in law, medicine or teaching.

Therefore, the best approach is to obtain independent legal advice as to whether IR35 applies. As part of this process it will be possible to ascertain if the client has a right of control over how the work is done. If there is no right of control over how the work is done, then it is possible to claim an allowance for mileage even if IR35 applies for other reasons.

The expert was Martyn Valentine of The Law Place, a legal consultancy specialising in IR35.

Editor's Note: Related --

Contractors' Questions: Any IR35 risk to using client's staff hire cars?

Contractors' Questions: Should I fight ex-client's 'no parking' policy?

Contractors' Questions: What if I can't use the client's on-site car park?

Thursday 20th July 2017