PaulT00

I'm in a bit of a quandary about this one, so any sensible suggestions gratefully received.

I work for an IT products company as a "senior consultant" - translation: someone who knows the product backwards and gets to go out to customer sites to help them use it - and so I spend a lot of my time "on assignment". My current assignment is in Central London, I live in the west country, so my employers have been paying travelling expenses, accommodation etc (totalling about 2500 a month) for the duration of the assignment. Not a problem because under the tax rules, it's a Temporary Workplace and I can claim the expenses without any tax involvement.

However, on September 20th this year, I will have been on assignment at this same location for two years. Which means that the IR suddenly treat my workplace as Permanent (even though the customer could say "on yer bike" at any point) and so all the expenses which my employers have been paying quite happily up until now, suddenly become taxable benefits.

I brought this to their attention in February of this year, and I've been chasing them regularly since. Basically if things go on as they are, I'm liable to get a f**king great extra tax bill next year. So far I haven't had anything in writing, just an emailed informal response about a month ago saying "we'll declare the amount on your P11D for 2004/5 and then pay you an agreed amount as a lump sum".

But what concerns me is, like I said, I haven't got anything formal in writing yet - and they're not a company which moves fast - and in any case nobody's saying what happens if (e.g.) I leave the company between now and when the tax bill from this VERY longterm assignment actually happens, or even how they're going to calculate the "agreed amount".

I have told my line manager and HR that I want a complete answer in writing before the 20th, but what should I do if I don't get it? Carry on working at the risk of having to pay several grand in extra tax out of my own pocket? Refuse to come into work on 20/9 if they haven't given me a proper answer by then? It's starting to really wind me up, I'm almost certain they'll try to stuff me and I'd really like to know where I stand legally.

scoob_babe

Call the Inland Revenue. You don't have to identify yourself and you'll get the right answers straightaway. I did this with pensions, rebates and stuff which I didn't have a clue on and they were very helpful!

stevem2k

Just report for work back at your companies office on 2years + 1day , inform them that this will happen with the reasons given unless you get what has been promised verbally in writing.

LMRnav2

If you are a full time employee of your company in the west country the surely the 2 year thing doesn't come in to it as this is only for contractors and temporary WORKERS. I think you need to contact the IR to get clarification.

Diablo

The problem you are facing is that a place at which an employee can expect to work for a period exceeding 24 months is treated as a permanent workplace from the outset.

Which means you'll be liable for the tax on all of your travel, etc, expenses paid to date.

the rules are here

And are for employees. If you don't get written agreement for payment of a gross amount which, after deduction of income tax at your highest band will be sufficient to pay the tax liability on the 2 years worth of travel expenses, you could be fubar'd

D

PaulT00

Diablo:

I've read the rules and I have to say I think the IR must be having a laugh... obviously they expect people to have access to a functional crystal ball!

But the thing is, when the posting started, it was only supposed to be for 3 months. At no time have we had a formal end date stated, or even an informal end date - the customer just kept on extending the contract. So perhaps the way I should have stated it is "if I am still here on 20th September (which I may not be) it will mark the beginning of the second year on a contract which was originally supposed to last 3 months but whose expected duration was not known after that original 3 months had ended". So unless the IR want to get particularly awkward, the 2 years' worth should not be an issue. However, if I *am* still here in September, from the 25th month onward any expenses paid *will* attract tax at 40%, albeit the bill won't be fully known until the beginning of 2006 or thereabouts.

Trust me, I have spoken to tax people about this and they assure me that I'm OK on the 2 years (if we get that far), but that after that it becomes an issue. If anyone were to suggest seriously that I might have to pay the tax at 40% on 45 grands worth of expenses then I would be taking legal advice immediately, with the intent of suing my employers for something because (a) they shouldn't have been paying the expenses in that way anyway (because they should have been taxable) and (b) had this been clear from the outset I would not have accepted the posting in the first place because there is no way I could have afforded the situation. They don't pay me enough!

And to be honest I suspect the IR would be looking at suing my employers as well, for misreporting employee benefits over many years.

But let's all hope (very hard!) that it doesn't come to that.

Diablo

Yeah, fingers crossed mate.

It seems grossly unreasonable that on 2 yrs and 1 day you become liable for all the 2 years tax.

If you've taken advice thats cool, just make sure that a) they qualified to give you that advice, b) you get it in writing, and c) they evidence the level of their professional indemnity insurance in case the revenue disagree.

I have to say that I am sceptical that the 2 years catagorically wont be an issue, given the rules, but I agree 100% its a crock of ****e.

You could perhaps return to base "formally" for a week or two and then go back?

PaulT00

It's all a bit stupid really.

I like the idea of going after the tax consultants... no guarantee of getting anywhere though.

After reading your message yesterday and then rereading the IR rules, I did send another email to my boss - he hasn't deigned to respond yet though.

Unfortunately we did think of the return to base for a bit option, but there's a problem. The rules refer to the employee spending a significant proportion of his/her time at the temporary workplace, and the proportion is 40% or more. So depending on how they work it, if you average out 100% of my time for 2 years with 2 weeks at base, it's still way in excess of the 40% limit for 24 months - so I don't think that one will wash.

The stupid thing is, I warned my employers that this might happen back at the start of this year and they still haven't sorted it out. It's their fault I'm in this sh!tty situation because they've failed to organise the assignment properly taking account of the tax rules, and now it's all about to hit the fan they're going "um... don't know... costs money...". Morons.

To make things even worse, this sort of thing, according to ACAS, isn't covered by employment law at all and would be down to a legal interpretation of the contract between the individual and the employer as to who gets to pay the bill if it happens...

"Not happy" is not even close!