Budget 2015: Chancellor announcement on Employment Intermediaries: Temporary workers

[Jessica@WhiteFieldTax]

Verbatim of email from HMRC today, for interest. Basically IR35 on expenses, although doubtless we will have to go five rounds to get the ground rules clear

Budget 2015: Chancellor announcement on Employment Intermediaries: Temporary workers – relief for travel and subsistence expenses.

Good afternoon,

Thank you very much for taking the time to respond to the recent HMRC discussion document – Employment Intermediaries: Temporary workers – relief for travel and subsistence expenses.

You may be aware, the Chancellor announced today as part of the Budget 2015; that the government will now consult on detailed proposals to restrict tax relief for travel and subsistence for workers engaged through an employment intermediary, such as an umbrella company or a personal service company, where that worker is under the supervision, direction and control of a third party.

Any changes will take place after this full and formal consultation and would be intended to take effect from 6 April 2016 and legislated for in a future Finance Bill.

The Chancellor also announced; the government wants employment intermediaries to provide workers with greater transparency on how they are employed and what they are being paid, with the Department of Business, Innovation and Skills consulting on proposals later this year.

The proposals announced are different from those included in the discussion document released in December 2014 and reflect the feedback and evidence HMRC received in response to that document.

The current proposal will remove workers’ entitlement to claim tax relief for travel and subsistence for their home to place of work where:

• the worker is supplied by an intermediary to a third party (an intermediary will include umbrella companies and personal service companies);
• the worker is broadly subject to direction and control by that third party.

So somebody who broadly looks like an employee will not be entitled to relief whereas someone who looks like a self-employed worker will continue to be entitled to relief. This approach aligns with that taken for agency workers in the Finance Act 2014.

• HMRC will be consulting on the detail of the proposal over the summer.
• In addition BIS will be consulting on ways to ensure that workers who are provided to clients through an intermediary will have greater transparency on how they are employed and what they are being paid.

Further information can be found in the Budget document (link below). The relevent paragraphs are:

Chapter 1 - Umbrella companies and employment intermediaries
- para 1.250

Chapter 2 - Employment Intermediaries: travel and subsistence (umbrella companies)
- para 2.79


Budget document

https://www.gov.uk/government/upload...Accessible.pdf



Thank you again for taking an interest in this area and for your response to the Discussion Document

[Lewis]

broadly subject to direction and control

What on earth! .... it just gets worse and worse.

[Andy Hallett]

I suggest you opt out

[SunnyInHades]

What on earth! .... it just gets worse and worse.

Many on-site contractors have a good chance of failing this ..

Progress meetings/agile scrums
'How's it going?'
'We have to ship on 22nd'

could all probably be interpreted as 'broadly subject to direction and control'.
This legislation is gonna need some carefully worded contracts to ensure compliance - now he understands the game,
Osborne's on the tax collecting warpath.

A few years ago (in my perm days) a contractor used to come into the office for a morning once a month or so (as and when he liked)
to update the web site - he's laughing, totally in-the-clear !

[Graham1967]

I thought the point of this change to Umbrellas was going to be regarding the kickback some of them are taking and the slight of hand brought up by the builder union Ucatt.

So now it appears many of these already lower paid temp works, who are FORCED to sign with an umbrella or there is no job, will now lose the right to claim expenses, and yet pay £25 a week for someone to do their PAYE.

And consider this.

Company has large workforce in Scotland.
Send down permanent staff to customers site to finish outstanding work. The are under direct supervision and control.
They receive, car hire, all fuel paid, 8 hours return paid travel every two weeks. Hotel is paid £800 a week, plus in the wages packet, receive usual wages, plus £35 tax free per day, and shift allowance, although they only work days.
They need some contractors who live 30 miles away, under direct supervision and control. You will get you wages, through the Umbrella, as for anything else to claim back, nothing it appears.

So are permanent members of staff, now going to be stopped receiving benefits to a temporary place of work.

If not does this now conflict with AWR. Cannot be right?

[SpontaneousOrder]

Many on-site contractors have a good chance of failing this ..

Progress meetings/agile scrums
'How's it going?'
'We have to ship on 22nd'

could all probably be interpreted as 'broadly subject to direction and control'.
This legislation is gonna need some carefully worded contracts to ensure compliance - now he understands the game,
Osborne's on the tax collecting warpath.

A few years ago (in my perm days) a contractor used to come into the office for a morning once a month or so (as and when he liked)
to update the web site - he's laughing, totally in-the-clear !

'Agile' has nothing to do with D&C, and technically Scrum would likely put you further outside D&C as it's a self-organised team with no boss, other than a customer representative who asks for stuff to be built.

**edit** sorry... I read the forward slash between agile & scrums. The point still stands though.

[LisaContractorUmbrella]

This won't just apply to umbrella workers but to agency workers and PSC's as well - consultations begin May/June on how it will work in practice. I wonder whether new legislation would take precedence over IR35 - just a thought.

A further thought - I wonder where the liability for determination of SDC will lie?

[PerfectStorm]

Right IPSE, fees paid... now's your time to shine

[centurian]

This won't just apply to umbrella workers but to agency workers and PSC's as well - consultations begin May/June on how it will work in practice. I wonder whether new legislation would take precedence over IR35 - just a thought.

A further thought - I wonder where the liability for determination of SDC will lie?

I'm reading it as being any PSC caught by IR35 will be affected (as the criteria is broadly similar), which probably includes public sector gigs.

The thing is - it kind of makes sense - after all, if you have been determined as being a disguised employee for tax purposes - insisting it is still a "temporary workplace" for expense purposes is a bit of a stretch.

If so, it also ups-the-ante on the cost of losing an IR35 case - it won't just been NI payments due, but also all travel and subsistence as well.

We will have to wait and see what the proposals are, but I suspect it won't be far off what I have listed above

[Unix]

This doesn't apply to Ltd companies so if you are worried then just use a Ltd?