Umbrellas Doomed?

[SueEllen]

One of the points we were discussing is that EDS "employees" may never work at their home office, just like some of us.

Yes but all employees of consultancies have a "home office" clearly stipulated in their contract.

And they are not allowed to claim expenses for any travel to offices within a few miles of the "home office". The distance counted as being in the zone of the "home office" varies by the dispensation the particular consultancy has agreed with HMRC for expenses.

Also because they have multiple shareholders they also do their best to keep their expenses down which means they don't allow employees to claim for money they haven't actually spent.

To be honest HMRC would be better of wiping the dispensations of all umbrella companies and if they want to act like payroll companies allow their employees to claim a fix sum against travel per year.

[expat]

Who / what is NL please

NL is New Labour. The discussion is reall about The Government but many of the right-wing political partisans on here speak in terms of New Labour on the basis of the loco idea, quite unsubstantiated by history, that things are different under Conservative governments.

[NickFitz]

To be honest HMRC would be better of wiping the dispensations of all umbrella companies and if they want to act like payroll companies allow their employees to claim a fix sum against travel per year.

I've worked through a brolly for several years now, simply because I can't be bothered setting up a company, as I reckon it's more trouble than it's worth for the extra tax hit. (I have no children but don't object to funding schools, and I haven't seen a doctor in twenty years except in A&E, when I've been very glad of the excellent care provided by the NHS when I've had a true emergency - and accepted the waiting time when it wasn't that urgent, but still A&E material.)

Although said brolly has the usual dispensation, it also allows one to operate on a purely-receipted basis. I've chosen the middle ground of not bothering with so-called "subsistence" round sums, but claiming for accommodation and travel, where I can provide full receipts for accommodation and correct figures for mileage, and receipts for all other claimable travel (i.e. trains when the car is at the vet's).

I therefore see no reason why I should be penalised by the restriction of my expense claims, which are entirely within the terms prescribed by HMRC (aside: some of you may want to bookmark that link for the next time you're wondering about the 40%/24 month business).

By all means hammer those who claim for a £25 meal and get a sandwich from Tesco, but if I pay full PAYE and Em/Ee NIC on my earnings, drive where I can prove I drive, and stay where I can prove I stay, why should I now be hounded and penalised for not bothering to set up a Ltd so I can actively seek to avoid tax?

[The Lone Gunman]

Yes but all employees of consultancies have a "home office" clearly stipulated in their contract.

I suspect those working under brollies have the same using the home office of the brollie. Most of us also have our own home offices too.

And they are not allowed to claim expenses for any travel to offices within a few miles of the "home office". The distance counted as being in the zone of the "home office" varies by the dispensation the particular consultancy has agreed with HMRC for expenses.

Why can't this be the same for a brollie worker?

Also because they have multiple shareholders they also do their best to keep their expenses down which means they don't allow employees to claim for money they haven't actually spent.

That is a matter for the shareholders in any company.

To be honest HMRC would be better of wiping the dispensations of all umbrella companies and if they want to act like payroll companies allow their employees to claim a fix sum against travel per year.

All workers should have to work to the same model when claiming expenses whether you work for your own Ltd, a Brollie, a headlease firm or a real employer. That includes MPs.
If dispensations are allowed then they should be allowed for all. If they are being abused HMRC has the right to remove the dispensation.

It has been an ongoing problem with NL (and it is not a right wing biased opinion) that they insist on making new legislation to close a percieved loophole as advised by HMRC. This leads to ever more focused and complex legislation which leads to ever more unforseen consequences which leads to ever more costs to business, the country and HMRC.

[NotAllThere]

... but if I pay full PAYE and Em/Ee NIC on my earnings, drive where I can prove I drive, and stay where I can prove I stay, why should I now be hounded and penalised for not bothering to set up a Ltd so I can actively seek to avoid tax?

Because the Government regard you already as actively avoiding tax, by using an over-arching contract with an umbrella company, and thereby claiming expenses which a typical temp and typical employee can't.

The ltdco model is to my mind closer to the bigco consultancy model than the brolly model.

[malvolio]

NL is New Labour. The discussion is reall about The Government but many of the right-wing political partisans on here speak in terms of New Labour on the basis of the loco idea, quite unsubstantiated by history, that things are different under Conservative governments.

Bollocks. Most of thethinking people around here are more concerned about competence than simplistic, tribal political allegiances. NL is palpably incompetent and has been for years, hence the mess we're in. I'd vote Monster Raving Loony if I thought they had the best people to run the country.

Back to the point though, employees have home office locations as part of their contract of work. Contractors don't. Umbrella users currently do, but it's assumed to be the Umbrella's offices. This is clearly a very easy thing to challenge and all HMG are suggesting is that the Umbrella user's home office is wehere he works at present. And if it is, he can't calim travel as per existing and well-established rules

Incidentally if as an employee you routinely drive 30 miles to work, but one day take a business trip elsewhere that makes you drive 50 miles the other way, you're only supposed to claim 20 miles. So if you live in Reading, work in London and your Umbrella's office is in Edinburgh...

[Fred Bloggs]

It isn't really even about tax. It's about stamping out those of independent thought and who wish to stand up and better themselves through their own endeavours. Socialists do not like that and never will. Unfortnately the tories will be hamstrung by-

a) A Blair clone leader who is basically a policy free zone and by
b) The financial mess that NL have got the UK into.

Expect little if any change in Gov't attitude to contractors as a result who ever wins in 2010. Certainly the family business tax and ir35 are set to stay.

[Archangel]

Certainly the family business tax and ir35 are set to stay.

The Family Business Tax has not been introduced (yet), so how can it be here to stay?

[Fred Bloggs]

The Family Business Tax has not been introduced (yet), so how can it be here to stay?

When (not if) it is introduced, the tories wont have the cash available to repeal it. Therefore = "Here to stay"

[malvolio]

When (not if) it is introduced, the tories wont have the cash available to repeal it. Therefore = "Here to stay"

In its worst incarnation, it will bring in around £600m a year. That's quite a lot to you and me, but roughly 0.001% of GDP. I don't think that will worry anyone too much, given that it's likley to upset around 20% of the electorate..

However it looks like they are doing the same non-consultaion process as last time, so it's doomed to failure anyway for exactly the same reasons.