Contracting & the 2 year rule.

[Allanv]

Hi,

Say I have been contracting to the same company on the same site for 2 years, my agency has now said that I am unable to claim expenses from now until it ends.

I can see where this is a guideline but unable to find that it is the law, the company I am contracted to do separate me from lots of things that a normal employee would be privileged to so is the agent correct or just interpreting the guidelines incorrectly?

For the separating bit:

No global employee emails only the ones that help me to do the job.

No Xmas / departmental party's or social activity even if I wanted to pay for it myself. I am forbidden to attend.

No Subsidised lunch.

No team meetings unless I am required as it is regarding work I need to be involved in.

The company seem to be more aware of what they need to do to keep me on the right side of contracting and not allow me to become a permanent employee by stealth if that makes sense and it is the way I prefer it.

Thanks in advance to Eric

[stuno1]

As far as I am aware if you have worked in the same location for 2 years or more it is deemed to be a permanent place of work and so you can no longer claim it through your company.

I don't see how this is your companies issue? It is down to you. If you are investigated you will be penalised, your risk not theirs.

Maybe wrong but that's how I understand it.

Stu

[williamp]

My understanding is this: as a sole trader contracted to a role, the government said this is basically unfair as if they use you constantly then they should employ you and you'll get the sick pay, holiday pay, maternity/paternity pay etc etc

A lot of agencies at the 2 year mark (ie when the person should become an employee) either let you go or suggest you become a limited company.

[Seti]

I believe its down to the revenue considering that, after two years, that is your permanent place of work and therefore does not allow you to claim expenses.

I'm sure Eric will be along in a minute......

[Fun Bus]

I think the legislation you need to read up on is IR35.

[Seti]

I don't think this has anything to do with IR35. Happy to stand corrected though.

[Du1point8]

Seti said:

I don't think this has anything to do with IR35. Happy to stand corrected though.

you are working solely for one company, so this kind of applies:

IR35 is the United Kingdom tax legislation designed to tax "disguised employment" at a rate similar to employment. In this context, "disguised employees" means workers who receive payments from a client via an intermediary and whose relationship with their client is such that had they been paid directly they would be employees of the client.

2 years is kind of the limit and some people do get away with longer... a lot longer but some get caught and then its st storm time.

Im sure Eric will come along in a bit.

[stuno1]

Ir35 is about being recognised as a permanent employee after being in the same job for over 2 years so connected I guess.

Ultimately I believe you (the contractor) are responsible for making sure you don't fall fowl of legislation if you get investigated.

Stu

[Kapenta]

If you are operating through a Ltd Company, or Umbrella, the explanation is right here.

http://www.contractoruk.com/expenses/24_month_rule...

[essayer]

Remember that moving to another role is not enough to reset the two year rule, where travel expenses are involved:

http://www.hmrc.gov.uk/manuals/eimanual/eim32080.h...

Edited by essayer on Tuesday 28th January 13:22