Umbrellas Doomed?

[Waldorf]

A friend has just emailed me this link, does not sound too great for the future of Umbrellas, sounds like they will be closed down as with MSC's.

I'm glad I went ltd, although it sounds as though the travel for us may be hit as well

http://www.hm-treasury.gov.uk/consul...l_expenses.cfm

[TheBigYinJames]

Originally Posted by Waldorf

A friend has just emailed me this link, does not sound too great for the future of Umbrellas, sounds like they will be closed down as with MSC's.

If they do, they do. Then I go Ltd again, will take me about 15 minutes, no biggie. The brollies which are also Chartered Accountants will just offer to administer my company instead, and I'll still have minimal paperwork.

[Gonzo]

Originally Posted by TheBigYinJames

If they do, they do. Then I go Ltd again, will take me about 15 minutes, no biggie.

Some of the comment from this informative website linky suggests that a reworking of IR35 might be in the pipeline too. Happy Days.

[chris79]

Serves them right for leading people to believe they can still do crazy stuff like claim £25 a day for a cup of tea with no receipts etc. There's a guy I work with who still does all that thinking it's totally fine and that it's their problem lol.

[TheBigYinJames]

But MPs are still entitled to their expenses for having to work away from home, of course.

[Gonzo]

Originally Posted by TheBigYinJames

But MPs are still entitled to their expenses for having to work away from home, of course.

And despite the fact that they are "working away from home" they can still nominate their Westminster home as their primary residence for CGT purposes.

[NickFitz]

"Consultation" about the possible need to deal with abuse of the existing system doesn't exactly imply "doom"

Although the pernicious use of terms such as "lead to a loss to the Exchequer" when what they mean is "legitimate avoidance of tax liability" does suggest that the orcs are more concerned with meeting performance targets than implementing legislation - the latter being what we actually pay them for

[TheBigYinJames]

Originally Posted by NickFitz

"Consultation" about the possible need to deal with abuse of the existing system doesn't exactly imply "doom"

Let's hope that consultation period + time to bill statute change + debate + implementation takes us over the next election

Not that I trust the Tories to not tax us either these days.

[The Lone Gunman]

Once again we see the blinkered viewpoint of the revenue and the influence it has on NL. It would not be half as bad if NL were not fixated on us not being proper businesses.

Any employee whether working for a brolly or a permanent employer can be paid travel and lodging expenses when required to work away from their normal place of work. This remains the case for up to 2 years. That is quite clear cut.
In this case there is no loss of revenue to the tax man.

What is not quite so clear is where the normal place of work is for a contractor.
Do we ever establish a normal place of work? Is it our home office (which some never use) or is it the last place we worked?

What is dazzlingly obvious is that HMRC and NL do not or will not recognise the legitimacy of our business structures and seem willing to do whatever they can to take ever more money from us.
They do not seem to recognise the dynamic nature of the IT industry (and other industries) that require a mobile and flexible workforce. Many of our clients do not need long term or permanent workers but do need bursts of expert workers for some projects.
We fill that gap.
This business structure has allowed me to gain some control of my work and finances. This structure means that I do not get laid off every 2 years (or less) as I did as a permie which in turn means I can establish pension and health funds. I can mange the periods between contracts (though I have been lucky) in such a way that my company keeps paying me and my bank account remains healthy enough to get and support a mortgage and other outgoings.

This new proposal if implemented will have a knock affect somewhere which will make the tax system more complicated or will show just how much legislation is being produced to single us out.
We as a group have proven to be hardy individuals and most of us will pass on the rise in costs to our clients or find other businesses and industries to work in. This may make us too expensive and may lead to more outsourcing and so to a loss of revenue to HMRC as billions goes overseas (again).

Rant over.

[original PM]

What is not quite so clear is where the normal place of work is for a contractor.
Do we ever establish a normal place of work? Is it our home office (which some never use) or is it the last place we worked?

In the case of a brolly it is the brollies registered office - and this is where it all becomes a bit murky - realistically a person who uses a brolly is in employee of the brolly - however hardly any people who use a brolly ever go to the brollies office (except for the odd few who felt they were not getting a decent response on the phone - but that is another story!)

So the registered place of work is the brollies office - their actual place of work is their client co or whatever - which is not the brollies office and so they 'legitimately' claim expenses for travelling to a different site from their 'official' place of work.

It is quite clear to see that the argument in real terms is pretty paper thin.

The real question is should people who take on fixed term contracts be able to otain some tax benefit due to their fleixbility and the uncertainty of the future (e.g. they may be out of work in the next 3-6 months).

It is a benefit to the economy in general if people with specialist/in demand skills are not penalised for being willing to travel to enable companies who need their skills to use them for a fixed time period without the burden of offering full time employment.