The relevant law is the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) s337-s339A, but the application is best illustrated by HMRCs four examples under ESM5590, in particular example 2. For examples 1-3 the contractor is working through an Umbrella under circumstances where Supervision, Direction and Control have been deemed to be similar to that of an employee by the end client (SDC is present/contract work was offered Inside IR35).

Example 1: travel to the normal workplace for each engagement is not deductible.

Example 2: travel to the normal workplace is not deductible, but travel to a temporary workplace is.

Example 3: travel is not deductible as the place is the normal workplace.

Example 4: Contractor is working Outside IR35 therefore all travel is deductible.

Thus, the key question in determining whether a contractor can claim expenses while working Inside IR35 is "are these expenses incurred for necessary travel to a temporary workplace"?

Note where we say "travel" above we mean all expenses relating to a journey, including travel costs, accomodation and subsistence.

This seems like it should be a fairly simple question howevever this is where things get complicated! There are various criteria set down in legislation, and some from case law, to answer the question.

HMRCs own guidance can be found here: Gov.uk "what is a temporary workplace"

Our summary of the rules are that it cannot be the main place of work, the employee must not spend more than 40% of their time there. In addition the visit must be for a temporary purpose or of limited duration.  

We recommend that the agency contract uses these words, and that it is an accurate description of the actual working practices.

Full instructions of how to submit a claim for expenses will be provided in your Starter Pack. We can only process claims which are supported with receipts showing clearly:

• the date of the expense
• the purpose of the travel/expense
• Supporting VAT invoices

At Mostly Remote we take our legal responsibilities extremely seriously and apply all expenses criteria according to the law. We only allow reimbursement of expenses that are properly incurred for business travel to a temporary workplace. We verify all claims thoroughly and our processes for doing so are independantly audited.

We DO NOT operate any disguised renumeration scheme and are happy to discuss and share information with any contractor or agency that is interested in utilising our unique service.

We are happy to work with you from the outset, including advice on the wording of agency contracts where necessary. Please do not hesitate to contact us with any questions.