2yr rule

[scooby]

Current contract ends purposely at 1yr, 51wks. I have 4mths left of this contract and client already want to extend by anything up to 6mths, maybe more (basically am running a major project and a major point of knowledge and setting this up and leading it from scratch...).

There may be an option of being located at different site (either across manchester or in yorkshire). I've raised the question of going direct (my contract does allow me to do this).

so, questions are:

What is the impact of spending more than 2yrs other than expenses?
I dont believe this to be an IR35 pointer? (am i right?)
Change of location is a reset of contract?
Going direct is a new contract, even if at same site?

[thunderlizard]

What is the impact of spending more than 2yrs other than expenses?
Nothing really. You just have to pay tax on your expenses. That will only make a difference if you're staying away from home, or commuting very expensively

I dont believe this to be an IR35 pointer? (am i right?)
Correct, by itself it's not.

Change of location is a reset of contract?
Going direct is a new contract, even if at same site?
The 2 years is to do with how long you personally are working at a place, regardless of the number and nature of clients, intermediates etc. "a place" is subject to some debate, but 2 offices served by the same local rail station would probably count as the same place.

[scooby]

cheers for the swift reply...

basically, i lose out on tax on my expenses (34miles per day so i'd even stop claiming if needed...).

is it a pointer that make HMRC look closer at you?

[d000hg]

How do HMRC know exactly, out of interest? They don't know who your contract's with do they, my end-of-year accounts don't appear to list such info to my memory.
So I can't see them wanting to investigate you for it.

Did I miss something stupid?

[centurian]

What is the impact of spending more than 2yrs other than expenses?
Nothing really. You just have to pay tax on your expenses. That will only make a difference if you're staying away from home, or commuting very expensively

Or if you are claiming more 'inclusive' expenses (i.e. fiddling) by claiming lunch every day when you bring in a packed lunch etc.

[mace]

How do HMRC know exactly, out of interest? They don't know who your contract's with do they, my end-of-year accounts don't appear to list such info to my memory.
So I can't see them wanting to investigate you for it.

Did I miss something stupid?

HMRC will only find out if a disgruntled co-worker/accountant complains to them about you or they randomly pick you as a victim for 1 of their investigations. If they investigate, then they'll ask you about how many clients you have for what periods etc. Obviously, if you have just 1 client for a number of years, HMRC are going to be more tempted to take things further than if you have multiple concurrent clients or a different client for just a few months at a time. I wouldn't lose a lot of sleep over it.

[scooby]

HMRC will only find out if a disgruntled co-worker/accountant complains to them about you or they randomly pick you as a victim for 1 of their investigations. If they investigate, then they'll ask you about how many clients you have for what periods etc. Obviously, if you have just 1 client for a number of years, HMRC are going to be more tempted to take things further than if you have multiple concurrent clients or a different client for just a few months at a time. I wouldn't lose a lot of sleep over it.

true true... this is all moving in my favour... Just run a massive tender for them, so am friendly with the head of procurment. that may help my case for direct.

Or if you are claiming more 'inclusive' expenses (i.e. fiddling) by claiming lunch every day when you bring in a packed lunch etc.

I've never claimed anything other than petrol for daily commute.

[DaveB]

another option is to reduce your time on site to less than 40%, that gets you out of the trap as well.

[scooby]

another option is to reduce your time on site to less than 40%, that gets you out of the trap as well.

no chance of that! altho distance working would suit me and is possible...

[blacjac]

If you are permanantly based at a new site (even for the same client & contract), and the commute is not "substantially the same" then the 2 year clock is reset anyway.

It's the "substantially the same" bit that is open to interpretation, some will say a 1 mile commute north changing to a 1 mile commute south is totally different, however a 100 mile commute north changing to a 110 mile commute north is not. Others will say if the commute is within the same x miles radius / town / city then it is not different enough.
In reality the only way to find out is get investiated....