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Commuting mileage claims

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I have a client who is a PPI case handler and is working under his limited company name for a bank.  He has been claiming mileage against his Corp Tax return for travel to this one place of work.  He is not an employee and I understand that the work will be temporary for around two years.  Can he claim mileage for his daily commutes?  If anyone knows of a link which explains this on Gov.UK, I would be very grateful.

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By Matrix
14th Dec 2018 00:04

Is he a Director and shareholder?

He should stop claiming as soon as he knows the contract will exceed 24 months.

I assume you have addressed the IR35 issues.

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By Lorna15
14th Dec 2018 00:28

Thanks for the reply. He is both a director and shareholder. The bank have mentioned IR35 and to me he definitely fits into this bracket but they are still paying his company in full. So are you saying that if the contract goes over two years he should no longer claim mileage to the office each day? It would be interesting if anyone has access to any manuals from HMRC on this.

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Replying to Lorna15:
By Tim Vane
14th Dec 2018 02:50

Lorna15 wrote:
So are you saying that if the contract goes over two years he should no longer claim mileage to the office each day?

The point that Matrix was making is that you should find out what "around two years" means. If it means he will definitely be there for less than 2 years then he may be able to claim mileage. If there is a good chance that he will be there for more than 24 months then he should not be claiming at all, as it is not and never has been a temporary workplace.

Lorna15 wrote:

It would be interesting if anyone has access to any manuals from HMRC on this.

Everybody has access to the manuals as they are on the HMRC website.

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Replying to Lorna15:
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By Matrix
14th Dec 2018 07:23

If you search temporary workplace or 24 month rule you will find it.

Your client self-assesses whether the contract falls inside or outside IR35. It is not the bank's risk so their view is irrelevant (unless it is a public sector contract).

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Replying to Lorna15:
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By Paul Barclay
17th Dec 2018 11:54

Some time ago we had a similar situation and claims for mileage were made. Mr Taxman didn't like it and stated that the journeys were "regular and frequent" and therefore constituted travel to a fixed place of work.

However, he did refuse to define "regular and frequent" I think they make it up as they go along.

I do believe that travel everyday does constitute "regular and frequent" so good luck.

Do let us know how you get on.

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By Samantha20
14th Dec 2018 11:58

But surely the bank is at risk as the PPI case handler could claim that he was an employee all along if HMRC say that he should have been self employed.

Also, HMRC could come after the bank for the PAYE and NI that they should have been paying over if they can't recover it from the case handler.

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Replying to Samantha20:
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By andy.partridge
14th Dec 2018 12:26

I think you are barking up the wrong tree.

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Replying to andy.partridge:
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By Samantha20
14th Dec 2018 12:30

I meant to say:

But surely the bank is at risk as the PPI case handler could claim that he was an employee all along if HMRC say that he should NOT have been self employed.

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Replying to Samantha20:
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By Accountant A
14th Dec 2018 13:17

Samantha20 wrote:

I meant to say:

But surely the bank is at risk as the PPI case handler could claim that he was an employee all along if HMRC say that he should NOT have been self employed.

Fortunately, I'm not in a position where I need to understand the various issues and I'm speaking from a position of ignorance about the wider issues. However, the OP said "working under his limited company name for a bank" so presumably the client's company has been appointed and there is no 'self-employment'. It would take some brass neck to have a contract with your company name on it and then try and claim you were an employee. Enforceable or otherwise, I suspect the contract will say the bank is not responsible for tax, etc., on payments.

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Replying to Accountant A:
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By Tax Dragon
14th Dec 2018 13:58

There might be a mildly interesting tangential technical issue if the bank happened to be one that was owned by the Government.

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Replying to Tax Dragon:
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By Accountant A
14th Dec 2018 15:14

Tax Dragon wrote:

There might be a mildly interesting tangential technical issue if the bank happened to be one that was owned by the Government.

Lloyds was fully private again sometime last year, from memory so that leaves RBS. I thought "employing" people via companies was now being clamped down on by large concerns looking to mitigate tax risk and, for banks, show themselves to be reformed characters.

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Replying to Accountant A:
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By Tax Dragon
14th Dec 2018 17:41

The CCO? That's true - I can see there might be the perception of a need for the intermediary's employee to show s/he's self-assessing IR35 correctly, in order for the bank to think it's not criminally facilitating evasion. Whether that need actually exists might be academic, if the "low risk" approach is direct employment.

I don't advise any banks (they don't pass AML! :)) so it's not a thing I've thunk about.

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Replying to Accountant A:
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By Samantha20
14th Dec 2018 15:25

Accountant A wrote:

Fortunately, I'm not in a position where I need to understand the various issues and I'm speaking from a position of ignorance about the wider issues. However, the OP said "working under his limited company name for a bank" so presumably the client's company has been appointed and there is no 'self-employment'. It would take some brass neck to have a contract with your company name on it and then try and claim you were an employee. Enforceable or otherwise, I suspect the contract will say the bank is not responsible for tax, etc., on payments.

I do not think it matters what the contract says. If HMRC rule that someone should have been an employee, then that that is what they should have been. A contact cannot change that. The bank would be responsible for paying over PAYE and NI.

HMRC would obviously try and recover the unpaid taxes from the employee, but if that was not possible then then would persue the bank.

If it the bank was not liable then banks would not have any employees at all. Actually, no company would have employees. Everyone would be working through limited companies.

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Replying to Samantha20:
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By andy.partridge
14th Dec 2018 15:35

I still don't think you have grasped this. What do you think IR35 is all about?

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Replying to andy.partridge:
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By Samantha20
14th Dec 2018 16:10

To stop exactly this sort of thing happening. ie. people who should be employees working through a limited company.

So if HMRC says that they should have been an employee, then the employee can claim for back holiday pay, sick pay etc.

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Replying to Samantha20:
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By andy.partridge
14th Dec 2018 17:06

I think you are mixing up limited company v employment rules with self-employment v employment rules.

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By Lorna15
14th Dec 2018 12:17

Yes, I agree that the bank should not be employing him in this way, but surely he cannot contest this?

I've just found this statement on an HMRC manual which now confirms my initial concerns that my client cannot claim for mileage as he is going to one specific location, having a line manager and therefore, being in a position where normally he would be an employee, regardless on how long his contract is (he works through an agency too):-

Jim lives in Brighton and is employed through an umbrella company under an overarching contract of employment.
His umbrella company arranges work for Jim at Crawley for 3 months in X Ltd’s warehouse, then in Portsmouth for a further 3 months for Y Ltd and then finally for Z Ltd at Eastbourne for 1 month. X, Y and Z Ltd are not connected companies. At all 3 locations, he works under arrangements similar to an employee and is told what to do by the managers at each workplace. He is reimbursed for travel and subsistence costs from home to all 3 destinations (Crawley, Portsmouth and Eastbourne).
Jim is under the direction of the client at each workplace and isn’t entitled to tax or NICs relief for any of these journeys. The employment intermediaries travel expense provisions apply which means that each of these 3 locations would be treated as a separate employment and so all 3 locations would be classed as permanent workplaces. The payments Jim receives for travel expenses are treated as his earnings for tax and NICs purposes.

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By Samantha20
14th Dec 2018 12:29

"Yes, I agree that the bank should not be employing him in this way, but surely he cannot contest this? "

Why not? There is nothing stopping him going to am employment tribunal saying that he should have been treated as an employee if HMRC say that he is one.

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Replying to Samantha20:
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By Accountant A
14th Dec 2018 15:31

Samantha20 wrote:

"Yes, I agree that the bank should not be employing him in this way, but surely he cannot contest this? "

Why not? There is nothing stopping him going to am employment tribunal saying that he should have been treated as an employee if HMRC say that he is one.

I could see that if the person was engaged as a self-employed individual but I understood the contract was between the bank and his company. How could that be recharacterized as employment of the individual?

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Replying to Accountant A:
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By Matrix
14th Dec 2018 17:20

Per above, if the contract is inside IR35 then the OP should prepare accounts on this basis and the Director gets less since the limited company would pay the PAYE and NI. There is no recourse to the bank (see all the recent BBC presenter cases).

This will change if the off-payroll rules are introduced to the private sector.

Sorry, meant to reply to Samantha.

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Replying to Matrix:
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By Accountant A
14th Dec 2018 17:28

Matrix wrote:

Sorry, meant to reply to Samantha.

Don't worry. I'm Samantha at the weekends too.

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By Lorna15
17th Dec 2018 12:26

I did try to advise my client that he should not be claiming mileage as it is classed as a normal commute but he is adamant that he can claim it. Apparently all his other colleagues who are working in the same way do the same thing! Oh well, I have warned him and he is responsible for his own taxes

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