Contractor travel from home to temporary work location

ArnieSilvia

Ok, so this ISN'T another contractor commute expenses thread

I'm looking for some clarification on travel expenses and subsistence, as I can't make any sense of it from Revenue documents nor from my accountant.

I'm a contractor working under umbrella company through an agency for my place of work.

The scale of operation is below 100k gross pa.

My home and family are in Dublin where I pay mortgage. I travel every Sunday evening to Co.Cork in my own car, where I'm renting a temporary accommodation (room). I travel back on Fridays to Dublin.

The costs are significant, in the region of 10k annually, plus wear & tear of the car.

So my permanent residence aka "home" or "place where I come back like to a home" is different from my temporary accommodation. I brought this definition on purpose as this is how the situation is assessed by revenue if you are a landlord and pretend to live at certain address to claim 14k tax free from your "licensee".

I was told by the accountant that I can't claim any mileage or rent for the room in Cork which doesn't make any sense to me. I'm employed by my company to run a business, but can't claim expenses.

In my view I should be able to claim weekly travel from Dublin to Cork and all expenses related to my temporary accommodation.
On the contrary, I shouldn't be able to claim expenses for my primary residence or daily commute.

The reason I argue this is because I also worked as a Sales Manager before and travelled A LOT. All diesel costs, car insurance, car costs, hotels, equipment were claimed as expenses. I could drive my own car and claim mileage EXCEPT on Mondays where I was going from home to office and I assumed that was BIK.

Say, if I was a Sales Manager and decided to spend a week in particular county doing my business, then I would still claim my temporary accommodation and travel costs as expenses???

Or if I was a fitter and was delegated to do work on client's site, driving company van and living in a hotel FOR MONTHS. I don't think that any of the lads doing this work are paying for it from their own pocket, it's all expenses.

Or, if a company is sending an employee to UK for 6 months and pay for flights and hotel, it's all expenses, no employee is expected to pay for it from their own pocket??

Why is it different for a contractor ?

So here's the question:

Why these two scenarios are so different and would it be any better if I had my own Ltd company and decent accountant

Would it be any different if I bought a company van and slept in a hotel or BnB?

Or, for a wild option - would it be any different or possible to register the company in other country and fulfil contract obligations in Ireland?

Not looking for tax evasion here, just a fair treatment compared to other businesses.

Lockedout2

Despite your opening post this is exactly a contractor travel expenses question.

So the reality of the situation is that Revenue have taking a view that you have created an artificial arrangement in order to avoid being an employee of the Principal employer.

In normal circumstances where an employer takes on an employee to work say in Kilkenny and after a period of time that employee is sent to work for a client in Dublin that that employer would pay travel and accommodation for that employee. There is no question on that.

If that same employee decided to leave their job in Kilkenny and move to Dublin then they are not entitled to any claim for their travel and accommodation.

Your situation is somewhere in the middle.

Personally I am of the view that if a contractor is taken on to work in Kilkenny and moves to Kilkenny then that sets Kilkenny as their base.

Then if they are transferred to Cork then they are away from their base and therefore should be entitled to expenses but Revenue seem to disagree.

Your accountant is advising on the Revenue interpretation of the rules, you are at liberty to go elsewhere, in fact you could pay yourself the expenses against their advice and argue the point with Revenue.

srsly78

Your normal place of work is in Cork it seems. Noone can claim travel expense for this.

dogbert27

Your situation was previously described to Revenue. The answer was that contracting is a lifestyle choice and your choice is to drive to Cork and rent accommodation yourself.

You go to the same place for work every day in Cork therefore that's your base in the world of Revenue NOT your home office in Dublin.

The only way to cover your expenses in this circumstance is to have an all in hourly rate that will factor in your expense 10,000 euro a year. That's after tax so building in to cover tax your looking at 20,000 euro so work out what the increase you need in your rate to be to cover 20,000 euro extra a year and then present that to the company who has contracted you.

20,000 divided by 12, divided by 4, divided by 40 is about 10.40 euro an hour extra you need to ask for. This will cover you expenses and your tax.

I'm only giving you the information, I'm not telling you to do it as I know the company will tell you no. That's why I don't contract in Ireland anymore.

wally1990

Your accountant Should advise the travel isn't claimable (to be compliant and prevent you under paying paye USC and social insurance as a tax deductible expense claim)

You cannot claim any travel from dublin to cork

The problem here is you took a contract in cork and are annoyed you cannot claim travel to the normal place of work

However on the other side of the coin, Revenue should relax the law in such cases for so called self employment to promote an increase in this area in my opinion

But anyway

the revenue state and I quote

'' Applying the foregoing test to the scenarios in Tax Briefing 3 of 2013, Revenue’s view is that a journey from the person’s home to a job is not a journey necessarily undertaken in the performance of the duties of the employment. The person is simply travelling from home.

The length and cost of the journey is not imposed by the office or employment but is dictated by the choice of place of residence of the individual concerned.

Similarly, an individual whose services are provided via an intermediary and who incurs expenses in living away from home cannot claim the cost of living away from home.

The fact that an intermediary may provide the individual’s service under a series of short-term contracts does not alter the position.

Each location at which the individual provides services becomes a "normal place of work" while the services are being provided to that end-user.

The expenses of travelling from home to each of these locations or the expenses of living at those locations cannot be reimbursed tax-free.''

wally1990

Lockedout2 wrote: »

Despite your opening post this is exactly a contractor travel expenses question.

So the reality of the situation is that Revenue have taking a view that you have created an artificial arrangement in order to avoid being an employee of the Principal employer.

In normal circumstances where an employer takes on an employee to work say in Kilkenny and after a period of time that employee is sent to work for a client in Dublin that that employer would pay travel and accommodation for that employee. There is no question on that.

If that same employee decided to leave their job in Kilkenny and move to Dublin then they are not entitled to any claim for their travel and accommodation.

Your situation is somewhere in the middle.

Personally I am of the view that if a contractor is taken on to work in Kilkenny and moves to Kilkenny then that sets Kilkenny as their base.

Then if they are transferred to Cork then they are away from their base and therefore should be entitled to expenses but Revenue seem to disagree.

Your accountant is advising on the Revenue interpretation of the rules, you are at liberty to go elsewhere, in fact you could pay yourself the expenses against their advice and argue the point with Revenue.

Sorry but the last paragraph is terrible advice to this person as per the outcomes of the contractor project in 2014 and going against his accountants advice

dogbert27

Due to the project that revenue kicked off in 2013 pretty much no contractor can claim travel and subsistence expenses as the majority are contracted to 6 or 12 month contracts for large multi-national companies which in Revenue's eyes is then there normal place of work.

10-15 years ago it was accepted that this is how contractors could operate. So historically rates in Ireland were not that high. Now that the game has changed though the only way to keep contracting is as I said, work out the expense of fulfilling the contract and build it in to your rate before accepting the contract.

The problem with that though is you will be pricing yourself out of the market until all contractors start doing this and companies accept that this is the new contracting has to be now.

ArnieSilvia

Thanks for replies, just to clarify, the work I do, or overall work arrangement is no different to multiple employees of subcontractors working on the site if they are delegated to do work far from their permanent residence.

Working as a contractor wasn't my life choice, I'd greatly prefer to avail all perks of job security, health insurance, pension etc etc.

This is a short term contract and my next position will most likely involve contracting and working in other location, that's the nature of working on startup projects. As I work on projects, there is no relationship with the employer in terms of development plan, career planning etc. It's my business to find a niche where my services are in demand, so why Revenue takes this stance is beyond me. Ok, if I worked in one place for years like a regular employee, doing same duties every day, I would probably agree. But I'm not. I'm on projects.

Seems like Revenue wants to have a cake and eat it too, now I understand why folks that were contracting in my profession moved elsewhere and never came back!

To give an example of equivalent arrangement if I was contracting in UK:

1. Accomodation=expenses
2. Flights to and from Dublin weekly=expenses
3. Travel from temp accomodation to work=expenses (per mile)

(This is what a UK accountant told me)

I might go down the route of arguing it later with Revenue, I don't fancy this perspective, though.

wally1990

ArnieSilvia wrote: »

Thanks for replies, just to clarify, the work I do, or overall work arrangement is no different to multiple employees of subcontractors working on the site if they are delegated to do work far from their permanent residence.

Working as a contractor wasn't my life choice, I'd greatly prefer to avail all perks of job security, health insurance, pension etc etc.

This is a short term contract and my next position will most likely involve contracting and working in other location, that's the nature of working on startup projects. As I work on projects, there is no relationship with the employer in terms of development plan, career planning etc. It's my business to find a niche where my services are in demand, so why Revenue takes this stance is beyond me. Ok, if I worked in one place for years like a regular employee, doing same duties every day, I would probably agree. But I'm not. I'm on projects.

Seems like Revenue wants to have a cake and eat it too, now I understand why folks that were contracting in my profession moved elsewhere and never came back!

To give an example of equivalent arrangement if I was contracting in UK:

1. Accomodation=expenses
2. Flights to and from Dublin weekly=expenses
3. Travel from temp accomodation to work=expenses (per mile)

(This is what a UK accountant told me)

I might go down the route of arguing it later with Revenue, I don't fancy this perspective, though.

The UK accountant would be correct due to the 24 month ruling however you could be subject to IR 35 legislation if you ever took a contract which may prevent such claims

So don't just assume it would be claimable

You need to identify the SDC supervision direction and control and clarify with the HMRC prior to ever taking a contract position

It was all changed in 2015 finance act by George osbourne

You would need to look In that in depth

dogbert27

ArnieSilvia wrote: »

Thanks for replies, just to clarify, the work I do, or overall work arrangement is no different to multiple employees of subcontractors working on the site if they are delegated to do work far from their permanent residence.

Working as a contractor wasn't my life choice, I'd greatly prefer to avail all perks of job security, health insurance, pension etc etc.

This is a short term contract and my next position will most likely involve contracting and working in other location, that's the nature of working on startup projects. As I work on projects, there is no relationship with the employer in terms of development plan, career planning etc. It's my business to find a niche where my services are in demand, so why Revenue takes this stance is beyond me. Ok, if I worked in one place for years like a regular employee, doing same duties every day, I would probably agree. But I'm not. I'm on projects.

Seems like Revenue wants to have a cake and eat it too, now I understand why folks that were contracting in my profession moved elsewhere and never came back!

To give an example of equivalent arrangement if I was contracting in UK:

1. Accomodation=expenses
2. Flights to and from Dublin weekly=expenses
3. Travel from temp accomodation to work=expenses (per mile)

(This is what a UK accountant told me)

I might go down the route of arguing it later with Revenue, I don't fancy this perspective, though.

Hundreds of contractors who got caught up in the 2013 project lost that argument.

You can take the risk but be financially prepared if you are audited.

It's a crap position to be in and frustrating. The IT and Engineering industries need contractors as they can't keep the overheads of a bloated salary bill for when projects are quiet.