Travel Expense Reimbursements
Clients of our practice are likely to already be aware that we are fond of HMRC’s simplified expenses rules for travel, particularly given the Irish rates claimable for cross-border travel here between Northern Ireland the Republic of Ireland.
However, a reminder last week from an HMRC case that went awry for an Umbrella company seeking to reimburse their staff for travel expenses.
The Catch
Exchequer Solutions Limited fell afoul of a nuance to the way in which they structured their work. Seeking to save themselves payroll costs when staff were not employed on a project, they ran their business on a policy of engaging staff only for the period of each individual assignment. This became the key reason their claim failed.
Under the travel expenses rules, expenses can only be reimbursed where the employee is outside a regular place of work. Had they been permanently employed by the company, each of these project sites would have comfortably met the condition of being a temporary place of work. At a base level this is a site where the employee is engaged temporarily and this situation does not last more than 24 months.
The problem was that in engaging their staff on a project by project basis, each project became a separate employment and, as the employee had been hired to work only on that site, they had unintentionally created a situation where each site was a permanent place of work for their employees. As their contract stated that there was no “mutuality of obligations” – i.e. that the staff members were under no legal obligation to accept work on the next project and the employer had no right to force the employee to work on another site under each contract, there was therefore no overarching employment between the sites.
Conclusion
This was clearly an employment structure written to avoid employees acquiring standard employment rights which arise from length of employment. Unfortunately, the employer did not consider how this structure played out for other tax claims they operated.