View Full Version : Permanent Place of Residence

3rd August 2004, 16:29

I hope I can get some clear advice on this issue since it seems another contentious one in the minefield that is ir35 (good luck they say).

I live in London but my contract is in Cardiff, so I rent a place and stay there Sunday through Thursday nights. Thing is, I don't "maintain the upkeep" of the London property - its owned by family and lived in by other members of my family.

My umbrella has informed me that for tax purposes my permanent place of residence must be Cardiff, since a) I don't own the London pad, b) I'm not a paying tenant and c) I'm not a mortgager. Meaning, the expenses I have been claiming over the last 12 months (prev. away from home contract as well) re. accom and travel to temporary workplace have been invalid.

I have been through the IRs guidelines (480-2003) and cannot see how my umbrella has reached this interpretation, nor can they explain this ruling sufficiently to me.


4th August 2004, 12:32
I'd say they are probably right. You live in Cardiff and go to see your mum/sister/whatever at weekends.

4th August 2004, 14:35
I disagree I thinks London is.
So where are you actually registered? ie what address is used for electoral register? (cardiff or london?)
if not registered then which address are you registered with the bank? Id use that one as the permanent address.
Thats what i did. I dont pay rent, have a mortgage (live with bro) either.

4th August 2004, 14:42
Not sure, but don't think that's right. The IR guidlelines state that for an expense to be claimable it must be one incurred for business reasons that is over and above your normal expenditure.

Assuming you really do normally live with your family between contracts, I can't see that it matters that you do not own the London place, you are clearly taking on an extra expense for business reasons.

If you look on the IR website you will find their own internal guidance docs that talk about this somewhere.

4th August 2004, 14:50
xoggoth... Agreed. This is my understanding of business expense in general. Not everyone fits into the category of owning or renting their own property.

I believe I am outside ir35 so my place of work is definitely temporary. If my contracted was ended tomorrow (6 months anyway) then I'd be back in London and there would be an empty flat (my risk).

In London, the phone is in my name, it is my billing address for everything. Cardiff only exists to support the contract and assist in providing the IR with the billions in NIC and tax I pay every month.

I have scoured the IR site for specific guidelines but cannot find anything that defines 'home for taxation purposes'. The co. in question is Brookson - they seem very thorough and professional but intractible when it comes to this issue. Could they have got it wrong?

4th August 2004, 15:35
The IR guidlelines state that for an expense to be claimable it must be one incurred for business reasons that is over and above your normal expenditure. Which is why I'd query this. From what was said it appears to me that you are currently living in Cardiff - it's not as if you are spending anything extra are you? I guess you pay diddly-squat for the London place.

I wish you the best of luck getting it but I can see why they are being a bit cagey.

4th August 2004, 15:48
over and above YOUR normal expenditure

... says it all. Just about 1100 quid a week over and above. Not my problem if my normal expenditure is lower than the average.

I do not understand your logic fiddleabout??

Darren at 1st Accountancy Serv Ltd
4th August 2004, 15:57
Ronald......are you sure you're outside IR35? Just a quick thought!

On the subject of expenses, the Cardiff rent is for business use as it is not you're permanent place of residence...you are there for the purposes of the assignment and nothing more. In fact, you could argue you are doing them a favour by not checking into a hotel (more expensive) & claiming this against you're expenses.

4th August 2004, 16:29
> I do not understand your logic fiddleabout??

Looks like nobody else does either so I'm probably wrong. Certainly if it is costing you more than your* normal expenditure I agree it should be chargeable as expenses. It just seemed to me that you were a bit of a nomad who was claiming to live elsewhere to legitimise your normal living expenses.

*beware chav accountants who can't spell :)

4th August 2004, 16:41
Re. Darren's post... As best as I can tell I'm outside IR35, but no one really know's until tested. My contract has passed and I meet the working practices qualification of a couple of contracting orgs.

Good point re. hotel expenses. I stayed in a hotel during my first 2 weeks @ 45/night. They couldn't even find me an iron some mornings. Great impression starting a new contract. Renting is light-years better value (but there's a risk if your contract's cancelled of course). Its 40% cheaper than the dog-house I was originally staying in and it rents for £600 a week as a daily serviced apartment (nice to expense that!).

The mob I'm fighting over this says if I was in a hotel during the week, it would qualify as my home for taxation purposes (just sleep in the park on the weekends). Sense, logic, window.

Re. Fiddleabout. All I want is a contract in London so I can stay there instead of wasting 10 hours a week commuting and my Sunday night. Unfortunately there wasn't one at the time for the work I do.

4th August 2004, 17:53
I find that, despite the standard six months contract, I can almost always talk landlords into accepting something shorter in practice. Never not got my deposit back yet.

This could be because of my charm, or more likely, in the sort of places I tend to rent as a dedicated cheapskate, they are just really pleased to get somebody that is not on drugs.

IR35 has nothing to do with whether you can claim this expense.

4th August 2004, 18:45

I rent a place in London where I live during the week (contract is in the City) but family etc. is in Cardiff - so my situation is exactly the same as yours except for the destinations being reversed.

I also claim the rent back against tax - my accountant has said that this is fine even though I live with folks/girlf in Cardiff between contracts.

What do you do I'm looking to move back - can I have your contract?!

4th August 2004, 18:53
OK kids, here 'tis. Thanks to Bradley on the other thread (http://p201.ezboard.com/fcukfrm4.showMessage?topicID=642.topic).

From the Revenue's Schedule E Procedural Manual (http://www.inlandrevenue.gov.uk/manuals/senew/SE31815.htm):
To qualify for a deduction the [accomodation] subsistence costs must be attributable to the business travel in the sense that they are costs incurred in travelling that are additional to any costs that the employee would incur if it were not for the business travel.
Ronald's accomodation costs are additional. The woman in their example (http://www.inlandrevenue.gov.uk/manuals/senew/SE31817.htm) makes things even clearer:
She has no permanent home...This is the only accommodation available to her.
Ronald has permanent accomodation available to him in the form of his family's house in London. Therefore, his accomodation costs in Cardiff, be they hotel or rented flat (assuming it's solely for business purposes) are fully deductible.

Unless anyone wants to point to any official doco that contradicts this...

4th August 2004, 22:47
Sorry for the delay in replying rknight73 but I had to play cricket. We won incidently. You can have my contract if you can bullsh*t extremely well and pay me a loads of cash.

Clement... you are the cross post fiend. Super effort that. You should be working for the IR.

5th August 2004, 00:56
We all knew and said that but the definitive quote of clause and paragraph is worth applauding. Clement yeh!!!!!!

5th August 2004, 09:29
The umbrella company is right-you can only claim tax relief on the second place of residence in the UK where you are paying rent, the bills or a mortgage on the first place of residence.

If you think about it, this makes sense, as otherwise everyone could get tax relief on their first place of residence

5th August 2004, 10:11
> they are just really pleased to get somebody that is not on drugs.

xoggoth - I'd strongly recommend you don't mention that you post here. I'd especially recommend that if, like the war, you accidentally mention it you certainly don't let slip your id.

5th August 2004, 11:17
Sorry Blondiebeeb, but did you read this whole thread? Or more specifically, the links I posted above? On what basis do you (and ContractorUmbrella) make the statement that rent/ mortgage/ bills are required to be paid for the Revenue to deem a property your home?

You've missed the point when you say "everyone could get tax relief on their first place of residence". We're talking here about what test the Revenue applies to your first place of residence when allowing you to claim relief on business accomodation under Schedule E.

According to the their own documentation, if you have to pay for accomodation whilst travelling for business, and this expenditure is additional to your normal outlay for living accomodation, the claim is legitimate. The level and nature of your normal expenditure not irrelevant.

In Example 1 of the examples (http://www.inlandrevenue.gov.uk/manuals/senew/SE31817.htm) I cited earlier, the woman has no permanent home, therefore she incurs no additional expense and can't claim. In Example 2, the man does, even though he's paying nothing on his home while he's away, so he can claim.

Quite frankly, I'm sick of people making declarations (and indeed, umbrella companies making policy) based on hearsay. Don't make blanket statements without backing them up. Point me to a legal precedent or any official tax documentation that supports your arguement.

5th August 2004, 12:25

"where the employee has tos tay away from home while on the course-for the additional cost of staying away from home. Employees will be entitled to relief for this only if they have on-going financial commitments at their home address, for example, the cost of maintaining their own home or of paying rent to retain accommodation."

at the end of the day, you will only know if you check with the IR.

5th August 2004, 12:50
Clement - would you mind telling us who you are ?

We had a bit of a conflict on our contractor website with a chap called Dave Lehman, who works for one of the umbrella companies and to be honest your posting style is remarkably similar.

Please don't take offence if you aren't Dave Lehman by the way :)

5th August 2004, 15:50
Heh, I've got a clone! :smokin

Alas, ************ I'm not your troll, unless I'm having a subconscious identity crisis and my name really is Dave. No, I know Ronald in RL, and like him I'm an IT contractor who works away during the week, but lives with family in London.

I've worked through ParasolIT for the past year, and they've got this 5/7 rule that says I can't claim for weekend rentals on my business flat, I find out now has no basis in the Revenue's own procedure manuals. I've also looked at going through Brookson recently, and was the one who alerted Ronald to their seemingly unfounded policy of having to be the renter or mortgagee.

I suppose I'm just fed up trying to get a definitive consensus on this issue. I'm happy to be proved wrong. I just get hacked off when people in forums present their opinions as fact without providing any supporting evidence for verification.

5th August 2004, 16:29

I will pay you loads of cash for the contract. There you go I can bulls**t really well.

5th August 2004, 16:59
OK. This (http://p201.ezboard.com/fcukfrm4.showMessage?topicID=647.topic&index=18) is the sort of thing I'm talking about (http://p201.ezboard.com/fcukfrm4.showMessage?topicID=647.topic&index=20). Blondiebeeb, a citation is an improvement, but it might help if you detail the source.

Googling it (http://www.google.com/search?q=%22the+cost+of+maintaining+their+own+home +or+of+paying%22&sourceid=firefox&start=0&start=0&ie=utf-8&oe=utf-8), I get 1 link to an old pdf from Jan '98 of Booklet 490, which has been deleted from the IR's site. If you're referring to this document, the quote is quite out-of-context: 8.9 relates specifically to personal tax relief for travel expenses incurred for short-term training courses that are not paid for by one's employer. Further, this reference is not even in the latest version (http://www.inlandrevenue.gov.uk/helpsheets/490.pdf).

Quoting like this is scurrilous, I say!