Umbrella cancelling previous expense claims

[chrisl]

My colleague is moving from Umbrella to Ltd after being Umbrella for about 8 months.
He has previously claimed travel and subsistence based on the temporary workplace rules.

Now he is leaving the Umbrella company have turned round and said that previous expense claims are no longer valid and the relief should be eliminated as he only worked for one employer in this period of 8 months and thus making this a normal place of work rather than a temporary place.

I haven't seen this before, is this he case?

[SueEllen]

Yes it's true if your read the HMRC guides properly. (Do a google search)

If you don't use the umbrella for more than one contract then your one client is considered a permanent workplace.

[Wanderer]

My colleague is moving from Umbrella to Ltd after being Umbrella for about 8 months.
He has previously claimed travel and subsistence based on the temporary workplace rules.
Now he is leaving the Umbrella company have turned round and said that previous expense claims are no longer valid and the relief should be eliminated as he only worked for one employer in this period of 8 months and thus making this a normal place of work rather than a temporary place.

The umbrella is doing the correct thing, though I know people who have worked for umbrellas on a single assignment who haven't had this rule enforced against them when they left.

The law is in ITEPA Section 339 (5) which states:

A place is not regarded as a temporary workplace if the employee’s attendance is—
(a)in the course of a period of continuous work at that place—
(i)lasting more than 24 months, or
(ii)comprising all or almost all of the period for which the employee is likely to hold the employment


How do the umbrella propose to recover the money? By a tax deduction from the final salary payment?

[BolshieBastard]

Altogether now, just say 'No!' to brollies. You know it makes sense!

[kingcook]

Altogether now, just say 'No!' to brollies. You know it makes sense!

+1

[ASB]

The umbrella is doing the correct thing, though I know people who have worked for umbrellas on a single assignment who haven't had this rule enforced against them when they left.

The law is in ITEPA Section 339 (5) which states:

A place is not regarded as a temporary workplace if the employee’s attendance is—
(a)in the course of a period of continuous work at that place—
(i)lasting more than 24 months, or
(ii)comprising all or almost all of the period for which the employee is likely to hold the employment


How do the umbrella propose to recover the money? By a tax deduction from the final salary payment?

Isn't the key word in there "likely"? Doesn't that make it a bit woolly?

Perhaps there could be an argument that the intent was to use the brolly for longer term, multiple assignments etc. However changed circumstances are what caused that not to happen. Should that therefore retrospectively causes the claims - which were valid at the time - to subsequently fail.

[malvolio]

Isn't the key word in there "likely"? Doesn't that make it a bit woolly?

Perhaps there could be an argument that the intent was to use the brolly for longer term, multiple assignments etc. However changed circumstances are what caused that not to happen. Should that therefore retrospectively causes the claims - which were valid at the time - to subsequently fail.

That's the point. They weren't actualy valid at the time. Tax is a year-by-year thing, remember.

[claretfan]

A similar thing happened to me and after much digging the advice I got from my accountant was:

If the initial intention when you joined the umbrella was to use the umbrella for multi assignments but you only ended up completing one assignment, you can claim back the exp's via Self Assessment.

Not filled my SE in yet and still debating if it is the right thing to do.

Any views ?

[escapeUK]

What a load of bulltulip are slave masters come out with.

So you do a 6 month stint somewhere via an umbrella, you then start your own business to contract through. The 6 month stint is classed as "permanent", despite having a temporary contract for 6 month. You couldn't make it up.

I remember when I was with an umbrella, I had one client who needed me perhaps one day every 4 months. The first 6 month contract expired having worked only one day, to save messing around every 6 months the client put a long finish date on the contract. The umbrella then told me I couldnt claim expenses as it would be over 24 months. Because working 6 days in 24 months, yes that's obviously a permanent employment.

As other posters have said, the clear message we should give out is "Under no circumstances consider an umbrella"

[Wanderer]

That's the point. They weren't actualy valid at the time. Tax is a year-by-year thing, remember.

That's what I was thinking but hang on, this is ITEPA Section 339 (5) which is also the 24 month rule for travelling and subsistence that we know and love.

It seems to me that you can actually claim as long as you reasonably expect that you the engagement will not:

(i)last more than 24 months, or
(ii)comprise all or almost all of the period for which you are likely to hold the employment

Therefore the expenses are allowable?