HMRC looking to curb travel expenses for self employed?

[Moonhawk]

oyster said:

Depends if that's your only client?
If it is, I'm not convinced you're actually running a business. Neither, as it seems, is HMRC. Hence the change in the rules.

Not sure I understand this stance. If a plumber takes on a large installation project that takes 6 months and it's taking up 100% of their time during that period - do they cease to run a plumbing business just because they aren't fixing Mrs Browns leaky tap during that period?

[FredClogs]

oyster said:

menousername said:

oyster said:

Depends if that's your only client?
If it is, I'm not convinced you're actually running a business. Neither, as it seems, is HMRC. Hence the change in the rules.

what he is running then?

A tax avoidance vehicle to operate as a temporary worker. Being a Ltd company one-man band doesn't make you a business. I know, I've done it before.

Nothing wrong about that of course, but at least be grown up enough to accept that tax rules can and do change.

They have the 2 year ruling on travel expenses already and of course they have IR35, neither of which are really all that clear or enforced/enforceable. I've done over 2 years full time on a clients site and was advised to just switch to invoicing through a different Ltd company if I wanted to carry on claiming expenses (which I didn't because although entirely legal I felt it wasn't really cricket).

The bottom line is if you're a one man band Ltd company you are practically untrappable, there are several million of use and only a handful of staff at HMRC able to investigate us, and bringing test cases is incredibly risky for HMRC because of the expense and possible laundering of quite how badly written and unfit current legislation is. Going for umbrellas catches a lot of people in one go and the accountants running the schemes generally don't have a vested interest in arguing the points, they just pass on the costs to their members.

The rules should be clearer, as I understand the 2 year rule exists because it's based on the HMRCs own policy on how they treat their own staff who are transferred from one office to another or seconded to other offices, which is a bit silly and clearly doesn't make any sense when applied to Contractors, Consultants and temp staff in industry.

The

[Dr Jekyll]

oyster said:

Dr Jekyll said:

So if I get a 6 month contract at a site 200 miles away, it's no longer worthwhile because of the non deductible travel expense, so I'll sit at home paying no tax at all.

The animosity by HMRC towards anyone who could be vaguely described as self employed is verging on the unhinged.

Depends if that's your only client?
If it is, I'm not convinced you're actually running a business. Neither, as it seems, is HMRC. Hence the change in the rules.

Where have I claimed to be running a business?

My point is that if I'm allowed tax deductible travel for my 6 month contract, or a 3 month contract, or a 1 week contract, I still end up with some income and paying some tax.

If I can't afford the travelling, I don't work so pay no tax. How does HMRC benefit from this?

[mjb1]

Dr Jekyll said:

Where have I claimed to be running a business?

My point is that if I'm allowed tax deductible travel for my 6 month contract, or a 3 month contract, or a 1 week contract, I still end up with some income and paying some tax.

If I can't afford the travelling, I don't work so pay no tax. How does HMRC benefit from this?

Then your temporary employer would either end up hiring more local based skills, or offer a higher rate to attract people from further afield?

[Dr Jekyll]

mjb1 said:

Then your temporary employer would either end up hiring more local based skills, or offer a higher rate to attract people from further afield?

So either they go to their second (or third or fourth or fifth) choice on the candidates list as opposed to the best choice, or they rather than the contractor are effectively paying the extra tax.

[Adrian W]

Dr Jekyll said:

So if I get a 6 month contract at a site 200 miles away, it's no longer worthwhile because of the non deductible travel expense, so I'll sit at home paying no tax at all.

The animosity by HMRC towards anyone who could be vaguely described as self employed is verging on the unhinged.

I have to pay to get to work, why shouldn't you, if it is to expensive take a contract closer to home!

It is about time that contractors got treated in the same way as everyone else by the revenue.

[FredClogs]

Moonhawk said:

oyster said:

Depends if that's your only client?
If it is, I'm not convinced you're actually running a business. Neither, as it seems, is HMRC. Hence the change in the rules.

Not sure I understand this stance. If a plumber takes on a large installation project that takes 6 months and it's taking up 100% of their time during that period - do they cease to run a plumbing business just because they aren't fixing Mrs Browns leaky tap during that period?

The number of clients you have has no bearing on anything, contractors would like to think it does but I've yet to hear of an IR35 case argued on the preposition that running a business solely for yourself requires you have more than one customer. The ability to substitute was for a long time to be considered important but I think that was all bunkum too.

[ralphrj]

Dr Jekyll said:

So either they go to their second (or third or fourth or fifth) choice on the candidates list as opposed to the best choice, or they rather than the contractor are effectively paying the extra tax.

Or do they go with the better candidate who cost slightly more because they weren't being subsidised by the taxman?

[ralphrj]

Adrian W said:

I have to pay to get to work, why shouldn't you, if it is to expensive take a contract closer to home!

It is about time that contractors got treated in the same way as everyone else by the revenue.

^This

And I say that as a contractor working through an umbrella company.

[Tuna]

Adrian W said:

I have to pay to get to work, why shouldn't you, if it is to expensive take a contract closer to home!

It is about time that contractors got treated in the same way as everyone else by the revenue.

Why? A mobile skilled workforce is surely good for the economy and other businesses is it not? If you're doing a building job that requires specialist installers that (a) don't conveniently live in the village next to yours and (b) are one of only a handful in the country, wouldn't it be a good thing if getting them on-site was not charged as though they've made a lifestyle choice?

Companies get lots of benefits from hiring contractors - from bringing in outside skills through to lower cost of staff turnover and better response to changes in the business climate.

If we're treated the same way as everyone else, can we please have paid holiday entitlement, free training courses, health cover, at least three months paid notice, child leave etc. etc. etc.

[Adrian W]

Tuna said:

Why? A mobile skilled workforce is surely good for the economy and other businesses is it not? If you're doing a building job that requires specialist installers that (a) don't conveniently live in the village next to yours and (b) are one of only a handful in the country, wouldn't it be a good thing if getting them on-site was not charged as though they've made a lifestyle choice?

Companies get lots of benefits from hiring contractors - from bringing in outside skills through to lower cost of staff turnover and better response to changes in the business climate.

If we're treated the same way as everyone else, can we please have paid holiday entitlement, free training courses, health cover, at least three months paid notice, child leave etc. etc. etc.

And none of that is worth the premium, every time I employ a contractor I regret it, and as soon as they start to get found out they bugger off.

I would happily give contractors all of those benefits and pay them the same salaries as permanent employees.

[GT03ROB]

Tuna said:

If we're treated the same way as everyone else, can we please have paid holiday entitlement, free training courses, health cover, at least three months paid notice, child leave etc. etc. etc.

You do. It's in your rate. Thats why contract hourly rates are around double the staff equivalent.

[Dr Jekyll]

Adrian W said:

Dr Jekyll said:

So if I get a 6 month contract at a site 200 miles away, it's no longer worthwhile because of the non deductible travel expense, so I'll sit at home paying no tax at all.

The animosity by HMRC towards anyone who could be vaguely described as self employed is verging on the unhinged.

I have to pay to get to work, why shouldn't you, if it is to expensive take a contract closer to home!

It is about time that contractors got treated in the same way as everyone else by the revenue.

Because it's totally impractical to sell my house and buy another for every contract. My last contract started as 3 months and lasted 6 months, the one before that was 100 miles away, started 6 months and lasted 8, the one before that was over 100 miles from either of the other 2 and started as 1 month, then extended to 3 months and renewed several times.

Firms take on contractors precisely because they don't want to commit to having someone on their books long term.

If your employer sends you to a temporary site and pays mileage or buys you an airline ticket, you aren't expected to pay tax on that sum, neither is the employer. Nobody suggests you should relocate for a temporary assignment so why should I?

If you think contractors are getting a better deal than you, then go contracting.

[Esseesse]

ralphrj said:

Esseesse said:

It never occurs to a government to make the travel expenses 'fair' they could just allow relief on all travel related to going to work. In fact, shouldn't this be the preferred option for a right leaning government (they're not)?

Why?

If everyone claimed home-to-work travel expenses how many more people would HMRC have to employ to audit the figures/process the tax rebates?

Why not? If it's too expensive to administer scrap the expense and cut a bit off fuel duty, income tax, and make a few redundant at HMRC.

[V8 Fettler]

The HMRC would prefer that everyone was PAYE, it would give the HMRC more control.

How is the place of work specified? Does two different buildings in the same street count as two different places of work?

[Studio117]

Adrian W said:

I have to pay to get to work, why shouldn't you, if it is to expensive take a contract closer to home!

It is about time that contractors got treated in the same way as everyone else by the revenue.

I pay to get to work, I pay for 2 sets of NI. I get no paid holidays, no sick pay and pay the usual income tax.

So you think I should not get any tax relief on some of my expenditure?

[Dr Jekyll]

ralphrj said:

Dr Jekyll said:

So either they go to their second (or third or fourth or fifth) choice on the candidates list as opposed to the best choice, or they rather than the contractor are effectively paying the extra tax.

Or do they go with the better candidate who cost slightly more because they weren't being subsidised by the taxman?

I'm not being subsidised.

[GT03ROB]

Dr Jekyll said:

If you think contractors are getting a better deal than you, then go contracting.

...and if you think staff get a better deal than contract, go staff......

[Moonhawk]

Adrian W said:

It is about time that contractors got treated in the same way as everyone else by the revenue.

Why should they be treated the same by HMRC when they aren't treated the same by the company they work for.

Being a permanent employee brings benefits that simply aren't available as a contractor (the company may pay relocation expenses, pension contributions, give you share options, pay NI, paid holidays, you are protected by redundancy rules etc etc).

Also - because of the transitory nature of contracts - the overheads of travel costs, subsistence, accommodation are often much higher for contractors than they are for permanent employees doing a 'normal commute'. It's not like you can move house and relocate closer to work when you are talking about 3 or 6 month contracts that could be anywhere in the country.

I don't mind everybody being treated the same - but surely it has to work both ways.

[FredClogs]

The bottom line is that if a Ltd company is contracted to another company to provide a service then the provision of that service and expenses accrued therein are an expense of that Ltd company, not an employee of that Ltd company.

I think all umbrella firms should be much more heavily regulated and the people working through them made aware of what their positions are - but if you run a Ltd company as a director be you a painter, plumber, IT consultant, mobile dog groomer or management consultant the business you do and the expenses you accrue are the companies, nothing else makes any sense.