Umbrellas Doomed?

[The Lone Gunman]

In the case of a brolly it is the brollies registered office [snip]

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.

I do not think this is correct. It was a while ago, but when I was a permie you established a place of work by spending more that 40% of your time there and I think this still applies.
You have to consider that working under a brolly establishes employee credentials. As an employee you do not necessarily have to work at the employers office. Your normal place of work is wherever you accept the job and it is up to you whether you move there or commute at your own expense. You can only claim travel and subsistance if the employer moves you, and then only for 2 years.

In this case HMRC have a point.

[original PM]

possibly TLG

but for most brolly contractors they spend 100% of their time at the clientco and therefore that is thier place of work and so they should not be able to claim expenses at all.

they need to prove that the place where they are actually working is different from the place they are employed to work.

I think also that the 40% rule only kicks in in conjunction with the 2 year rule and is to do with calculating if you can claim expenses if working at the same place of work for a period of more than two years but not on a permanent basis. SO for example if you were working 1 or 2 days per week at a client site over 5 years the 2 year rules would not apply. (not 100% sure!)

[NotAllThere]

...
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...

Not at all. Employees of EDS, Crapita etc. may well always be at client site. I think these big businesses would complain most vociferously if the expenses suddenly became not tax-deductable for their employees.

You do not have to have a permanent workplace in order to have temporary work places.

Whatever the government do, they have to be careful that it doesn't offend their big business buddies. Any legislation aimed at brollies could have a knock on effect on large consultancies.

It is worth noting, however, that if you only have ONE client site with a brolly, or as employee of a consultancy, then expenses may well be not tax deductable.

[expat]

...
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.
...

It seems to me more and more that NL take the view that there does exist a correct business structure for our flexible kind of work: that is for us to be employees of consultancy companies.

This suits the biases of the ex-Andersen Consulting people in the cabinet, who think that consulting companies are value-adding entities, and techies their raw material.
It suits the biases of old Labour people, who see the economic world in terms of employment. They can deal with employees and employers, but not with people who are neither.
It suits the finance people, who find PAYE easier to keep tabs on.

[TheBigYinJames]

It is worth noting, however, that if you only have ONE client site with a brolly, or as employee of a consultancy, then expenses may well be not tax deductable.

I think there may well be a case for reducing the 2 years, perhaps to 6 months. This would catch a lot of 'permitractors' who are not really at a site on a temporary basis at all. This would have caught me at the current gig (13 months) but generally temp contracts are 3-6 months, so it would still allow truly flexible IT consultants to do their thing, while penalising permitractors who are basically employees hiding as temporary.

[LisaContractorUmbrella]

Morning everyone

Well, having ploughed through the entire 49 pages of this document it seems as though this is another attempt by the IR to create a 'level playing field' for umbrella companies and agencies alike. There is much discussion about overarching contracts and home to work travel but much of the document is also concerned with companies abusing the rules - they even cite adverts used by umbrella companies e.g. 85% take home pay, Inland Revenue approved expenses etc etc. The consultation is open until October so we have until then to get our opinions accross

[The Lone Gunman]

I think there may well be a case for reducing the 2 years, perhaps to 6 months. This would catch a lot of 'permitractors' who are not really at a site on a temporary basis at all. This would have caught me at the current gig (13 months) but generally temp contracts are 3-6 months, so it would still allow truly flexible IT consultants to do their thing, while penalising permitractors who are basically employees hiding as temporary.

My contracts tend to be longer ones, but are still temporary contracts. You could not come into some of my projects and add any value within 3 months as there is so much to pick up first.
Again, we should be looked at as smaller versions of EDS etc. They take on contracts and supply bodies for years. Why cant we?
As was stated earlier, their employees are expenced at client sites. Why cant we?

HMG and HMRC have got this one completely wrong (I mean all anti contractor legislation) and will not admit or accept that they have. They need to sit down with us and establish legitimate criteria that allows us to do waht we do even if it means a few permatemps slip through the net.
We are not a cost to the treasury, far from it and if they open their eyes they would see that.

[TheBigYinJames]

Again, we should be looked at as smaller versions of EDS etc. They take on contracts and supply bodies for years. Why cant we?

I agree totally, I think the 2 year rule is fine. But I was speculating at a possible compromise for them to get some money, and for us to still be able to work flexibly withouth being penalised. Since they seem to like introducing complexity into taxation to scare people off, perhaps the expenses level claimable could be taild off over time.. say full whack for 12 months, then 50% for the next 12.

HMG and HMRC have got this one completely wrong

Well there's no right and wrong, they can tax us however they want, it has consequences. Companies in the sticks won't be able to attract consultants away from the cities because they won't be able to pay them enough to compensate for lack of expenses. We'll all have to put our rates up, so this is a tax on client companies who will find IT expertise more expensive than ever. On the upside, perhaps more companies will allow working remotely instead of expecting bums on seats all the time.

We are not a cost to the treasury, far from it and if they open their eyes they would see that.

But then we're not voting for them, either. So stabbing us gets them more money for no loss of seats.

[The Lone Gunman]

TBYJ: Just on the expenses rule bit.
I work on some of the biggest military (and other) programmes in Europe. Some of my clients want a design to delivery commitment. How long do you think it takes (for example) to put a new sat nav system including all mission data into a helicopter?
2 years is not enough for some projects and some of my clients know this. Some even put rates up to compensate because they want us to stay, others just bite the bullet and spend 6 months training the next guy.

We all have different set ups. Some can do 2 week stints some of us cant. HMRC and NL want to see us as a catch all and it just does not work.

[TheBigYinJames]

TBYJ: Just on the expenses rule bit.
I work on some of the biggest military (and other) programmes in Europe. Some of my clients want a design to delivery commitment. How long do you think it takes (for example) to put a new sat nav system including all mission data into a helicopter?

I know, I've worked on MILSPEC projects as well, and they drag on for years, sometimes decades. I was working on a FRES military vehicle that is not due to be deployed until 2018, FFS

The treasury might argue that if they need a 2-3-5 year commitment from a 'temporary worker/company', they are actually employing that worker/company on a permanent basis. I think this is wrong, but it's harder to argue against.