Contractors' Questions: Can I beat the 24-month rule?

Contractor's Question: Does taking a break from a client get round the 24-month contractor expenses rule?

Expert's Answer : The simple answer to this is no, it does not. If a contractor is based at a temporary workplace and then leaves, only to return to the same workplace a short time later, then this would usually be considered by HMRC to be a continuation rather than a genuine break. For that reason the 24 month clock would not be reset.

If, on the other hand, a contractor were to end their relationship with Client A and undertake work for Client B, and then return to Client A, then this would usually be considered acceptable, but only if the second contract had not been planned or envisaged when the first contract was put in place. In this scenario the 24 month clock would indeed usually be reset, enabling the contractor to claim expenses.

However, every case is different, and we would always advise contractors to seek professional advice if they are at all unsure of their position.

The expert was John Lyon, managing director of Independent Contractor Services Limited, a provider of accountancy and administration services for the contractor marketplace.


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