Ask most people where they work, and they won’t hesitate as it should be a fairly simple answer but for years contractors have had to deal with complex rules around when a client’s premises is and isn’t their permanent place of work.
It’s very common for contractors, consultants and freelancers to work at the client’s site when doing a job. Usually this means they can claim the travel, accommodation and food expenses back that were incurred due to working away from their usual place of work but only if the site is not deemed to be a permanent workplace.
The general rule for determining whether a workplace is permanent is that it must meet BOTH of the following criterion:
- Individual has worked, or is expected to work at the premises for 24 months or longer;
- Individual spends, or is expected to spend at least 40% of their working time at the premises.
This means that someone who works at home for 3 days a week and then goes into the office for a further 2 days per week will still comply with the second rule, so they’ll have to stop claiming travel and subsistence as soon as they comply with the first rule.
The key part of these rules that is often overlooked is the ‘or is expected to’. This means that if a contractor signed a 3-year, full-time contract, with his client that will involve working at their premises, no travel expenses can ever be claimed to get to their premises because it’s already a permanent workplace. If, however he started an 18 month contract and then when he finished it, it’s extended by 18 months, he can claim travel expenses up until the point where he knew the contract will be extended.
Another aspect that is often overlooked by those who work on their client’s premises is that gaps in working there do not restart the 24-month rule. HMRC don’t give an exact definition of how long the gap needs to be before the 24-month rule restarts but the examples they give in the legislation state use up to 6 months gaps that don’t restart the 24-month rule. It’s generally accepted that if the contractor works for more than 40% of the time at the same premises during the period from the start of the first contract and the end of the last contract then they are subject to the 24-month rule for the full term.