Is there any contractor bookkeeping guru's out there? I have question about a contractor being able to claim expenses.
I have a client who worked permanently for Company A for 12 years and left the company for their own reasons and moved to another permanent job (Company B). Six months later Company A has asked if they would like to come back on a 9 month contract and the client wants to know if they can they claim travel expenses?
I have read that because they had been away from Company A's site for at least 6 months then the 24 month period starts again and they are able to claim, but it is very confusing.
I could be wrong, but I didn't think that was relevant. Someone could work for the same company for a number of years. If they are sent to a temporary workplace for less than 2 years, they can claim the travel costs.
See here by way of example (maybe not the best, but the first one I came across on HMRC website)
I know that this isn't answering the question asked but might be worth mentioning to your client.
Note that the contractor must cease claiming expenses from their company the moment that they believe that the contract will go for more than 24 months.
This seems unfair as imagine the situation where Joe Bloggs extends their contract by 12 months which will take them to 25 months. In month 11 of the renewal the contract is pulled a few days before the 24 months is up but even though the contract did not go beyond 24 months they cannot claim expenses for any of the 11 months because the contract should have gone beyond 24 months.
This is a common misconception amongst contractors who believe that they can claim for the 24 months and must then stop reveiving expenses. The reality is quite different.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thanks for the replies. I've been on the HMRC website (and checked out the examples) and my client has been on a forum specifically for Contractors account queries and we are not much closer to a definitive answer. It seems people interpret the rule in many different ways (as mentioned by Shamus above).
The contract is currently 9 months, could be made longer or shorter, but definitely no longer than 24 months.
Kate, I don't think the Queen does contracting work - although you never know...
Personally, I think a contract of 9 months would be fine.
Incidentally, note that Shaun mentions about 'claiming expenses from their company' - I didn't really think of that, I was expecting the employee to have to fork out for their own travel, and that the question related to what was allowable for tax relief. Your original question mentioned 'claim travel expenses', I just thought that it would have been rather black & white whether their employer paid them or not.
I have a client who does 6 month stints at various power stations around the UK (under PAYE), we claim tax relief on travel for him. I just thought it was the same scenario.
I saw it as the client pays the contractors company the full amount inclusive of VAT and then the company pays the expenses (hotels, mileage, etc.) before paying the director a salary.
Thats the model that I use for the banking side of my business but I know that some contractors have gone down the unbrella company route which is a little different.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Think I may be wide of the mark on this one, I thought the question was referring to an employee of a company - contractor being the kind of work being done - rather than a IR35 (or not as the case may be!) style contractor.
My brain hasn't recovered yet from an intensive day yesterday!
Something must be in the air post 31st January. I at first interoperated your quote,
"I have a client who does 6 month stints at various power stations around the UK (under PAYE), we claim tax relief on travel for him. I just thought it was the same scenario."
as an employee of the various power stations rather than his limited company contracting out his expertise to various power stations.
Kate, I don't think the Queen does contracting work - although you never know...
Personally, I think a contract of 9 months would be fine.
Incidentally, note that Shaun mentions about 'claiming expenses from their company' - I didn't really think of that, I was expecting the employee to have to fork out for their own travel, and that the question related to what was allowable for tax relief. Your original question mentioned 'claim travel expenses', I just thought that it would have been rather black & white whether their employer paid them or not.
I have a client who does 6 month stints at various power stations around the UK (under PAYE), we claim tax relief on travel for him. I just thought it was the same scenario.
Sorry, I should have been clearer on my original post, but it does seem to be a grey area.
It is whether they can claim the expenses at all, rather than a tax relief query.
(I don't think the queen does contracting either, but maybe one of her helpers at the revenue might know about it )
but maybe one of her helpers at the revenue might know about it )
