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Inside IR35, specific question about imminent changes to T&S

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    Inside IR35, specific question about imminent changes to T&S

    Hi, all

    Been researching this for an hour and think I have the answer but not found anything specific enough to fully confirm, so asking on here for the collective wisdom of CUK.

    I operate inside IR35 (no need to try and challenge this, please! I know it's not the norm, and I'm not wanting to open this up for debate. It was a decision I made a while ago, fully understanding the consequences, because of the kind of roles I am doing.)

    I accept therefore that the new changes to T&S will affect me. I have been working for the same client since May 2015, so just under a year. I'm about to sign a new contract with them to take me to end of June 2016, so I will have been working for them just over a year by the time that is done.

    The client is based in London, but there is another company office in Dublin. In my first contract I had to travel to Dublin a few times. In my second contract (nearly complete) I've needed to travel to Dublin more often and this will continue for my next contract. It's now roughly every other week, but it actually works out slightly less than that. When I travel there, I go either for 2 days or 3 days. So at maximum, it's 3 days every other week, or 30% of my time (but I think if I added it up it'd end up closer to 20% of my time, there are always various reasons why I end up there less plus sometimes as I say it's 2 days). The rest of my time I am either in London office or working from home.

    Up until now I have claimed all T&S expenses - whether to London or Dublin - as tax deductible. Bearing in mind I operate inside IR35, that's quite significant as allowable T&S expenses are one of the few deductions allowable against tax in the IR35 deemed employment calculation. I live a long way from London so as I say, even the London T&S costs are relatively significant.

    I accept that with the change in regulation, going forward there will be a change in what it is allowable for me to claim for allowable T&S. The question is, what is the specific change?

    I think that going forward, if I am treated as an 'employee' of my client for T&S purposes, then my London T&S expenses are no longer claim-able, because this is classed as 'ordinary commuting'. But I think that my Dublin expenses will remain claim-able (just as they would be for any of my London-based permanent employee colleagues who do similar) because that is not 'ordinary commuting'.

    As an aside, the difference between London and Dublin is recognised in my contract with the client because I can invoice them for T&S to Dublin, which I think underlines the point.

    I found the draft guidance issued earlier:

    https://www.gov.uk/government/upload...t-guidance.pdf

    ... and I think I'm in the same situation as the example individual Jim (except that he is brolly and I have MyCo):
    Example 2 [I originally copied and pasted the wrong example! now corrected]
    As in example 1 Jim is employed under an overarching contract of employment with X Ltd meeting the tests of supervision, direction or control outlined in EIM80100. During the three months Jim os working in Crawley in X Ltd’s warehouse he is asked to spend three days working at X Ltd’s other warehouse in Shoreham.
    He is not entitled to relief for travel and subsistence in respect of travel to and from Crawley, but is entitled to a deduction under section 338 ITEPA for the travel and subsistence costs to go to Shoreham as this is travel to a temporary workplace and is not a new engagement.

    The difference, however, is the proportion of time. I expect to be in Dublin a little more often than Jim is in Brighton during his contract. However it's still not a daily thing, and still a relatively small proportion of the contract - if we go back to the 24 month rule it's definitely no more than 40% for example.

    So I think I can continue to claim my travelling expenses for Dublin trips even after April, but not London.

    Thoughts gratefully received - and in particular, has that draft guidance been made final?? I couldn't find a link to a final version!
    Last edited by Glencky; 24 March 2016, 15:23. Reason: correct error in example quoted

    #2
    Blimey.. How long. Anyway of cutting this down so it's easier to understand?

    You are invoicing them for Dublin and claiming it from the company?
    Last edited by northernladuk; 24 March 2016, 14:44.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #3
      Yes, I am - and sorry, I didn't realise quite how long it had got. I'll go back and try and fix it.

      I personally claim T&S from MyCo for all expenses for T&S away from MyCo registered office (my home).

      I invoice the client only for the non-London expenses.

      Currently all of those T&S expenses I claim from MyCo (Dublin AND London) are allowable business expenses, an allowable deduction in the IR35 calculation and do not attract tax for me personally. I know this will change going forward, but I think because of my working pattern it will be only the London ones that are now excluded.

      Comment


        #4
        I agree with your view.

        You can claim T&S for your trips to Dublin, if your base office, and the one you spend most time at is London. Assuming the permie employees do the same, I can't imagine there would be any challenge.

        Comment


          #5
          From my understanding you can continue claiming the T&S to Dublin direct from the client as per your contract. If you didn’t have this provision in your contract you could still put the Dublin T&S through your Ltd. company as this is a temporary workplace seeing as you spend <40% of your time there. Check with your accountant though, they should be up to speed on this stuff.

          Comment


            #6
            I concur. Your Dublin T&S would be allowable for tax relief (via your SATR), because this would not be defined as H2W travel. By way of analogy, a regular employee could claim tax relief on this travel, and that is the yardstick for any assessment of what is claimable under the new rules.

            Comment


              #7
              Thanks, all - OK probably a bit pointless trying to edit down the original post given so many replies already so fast!

              Glad to hear others concurring with my view.

              Does anyone know if that draft guidance got made 'final'?? From a reasonableness perspective it should be perfectly reasonable that a London-based worker should get travelling expenses for travel to Dublin as yes, the permies would. But reasonableness is not always in line with regulation so I find the example of Jim to be very helpful, and I'd like to see it made 'final' rather than draft!

              EDIT: and yes, I will indeed check with my accountant - but I like to inform myself and asking on here is part of that.

              Comment


                #8
                Originally posted by Glencky View Post
                Thanks, all - OK probably a bit pointless trying to edit down the original post given so many replies already so fast!

                Glad to hear others concurring with my view.

                Does anyone know if that draft guidance got made 'final'?? From a reasonableness perspective it should be perfectly reasonable that a London-based worker should get travelling expenses for travel to Dublin as yes, the permies would. But reasonableness is not always in line with regulation so I find the example of Jim to be very helpful, and I'd like to see it made 'final' rather than draft!

                EDIT: and yes, I will indeed check with my accountant - but I like to inform myself and asking on here is part of that.
                http://forums.contractoruk.com/futur...ll-2016-a.html

                But it's not easy reading

                Comment


                  #9
                  Hahaha! thanks, Mudskipper - I can cope with not easy reading, I just didn't realise this would be incorporated into the final Finance Bill, I assumed there would be guidance separately. I'll have a trawl. Fun, fun, fun!

                  Comment


                    #10
                    Originally posted by Glencky View Post
                    Hahaha! thanks, Mudskipper - I can cope with not easy reading, I just didn't realise this would be incorporated into the final Finance Bill, I assumed there would be guidance separately. I'll have a trawl. Fun, fun, fun!
                    Bear in mind how the legislative process works w/r to your desire for something "final". I believe this FB hasn't even passed through Second Reading yet.

                    Comment

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