Leaving umbrella co - charges and no expenses?

[LisaContractorUmbrella]

plenty of contract I have a agreed to have had one days notice either side

Sorry, what?????????

[Wanderer]

I have had several assignments under the umbrella. So does this mean they are not correct about my expenses?

Presuming you are talking about travel and subsistence claims for working at a temporary workplace, HMRC rules are that the umbrella must disallow and further travelling and subsistence expenses if the intention or the reality of the relationship is that you only ever work for a single client through them (or if the engagement will exceed 24 months but I digress).

However, as stated in EIM32080, the umbrella should allow the expenses if you worked multiple contracts at multiple client locations. I think the answer is to talk to the umbrella company and get their reasons for refusing to allow the latest expenses. I think they have probably automatically disallowed this to take a conservative approach and this can probably be sorted out pretty easily if you point out that the expenses are still allowable.

1. Your brolly is correct, as soon as you make them aware that it is your intention to leave; the temp workplace becomes permie and so for that reason you would be unable to offset any further expenses.

This is only true if there is a single engagement through the umbrella company or if the worker spends more than 24 months at one site. This does NOT appear to be the situation we have here.

You say "this covers 2 months invoices, which leaves me really out of pocket" - Yes its nice to receive the tax benefit from offsetting your expenses, but it sounds like you are really dependant on them? They are costs you will incur to perform your duties and so if those costs are that high that it is causing you a financial burden when they are not offset then you really should consider getting a higher paid contract or going back to being permie (where expenses won't be an issue)!

Depending on the income, the tax relief on expenses could be as high as 50% so I would say that it could leave someone substantially out of pocket and it's worth following up.

2. Presumably you will be employed under some form of contract of employment with the brolly, so naturally one would expect this arrangement to facilitate a provision for giving notice to terminate, although in my experience most brollies won't allow for termination part way through a contract and so you should count yourself lucky if your brolly is willing to let you go so easily.

The suggestion that a contractor should be somehow beholden to an umbrella company astounds me. It would be a pretty abusive relationship if umbrellas worked this way. The umbrella isn't doing the contractor a great favour by "employing" them and the contractor is NOT subordinate to the umbrella. The umbrella should count them selves lucky that the contractor has chosen to use their services.

The contractor should be able to terminate their relationship with the umbrella at any time (subject to a reasonable notice, say 7 or 30 days depending if they are on weekly or monthly payroll). If the umbrella say you need to give 4 weeks notice that you will no longer use their service or there is a leaving fee then that's fine - as long as it's clearly stated up front in their terms of engagement.

Even when using an umbrella you have to avoid the permie think. Contractors are effectively working for themselves and offering services to the end client. All the umbrella (or agency for that matter) is doing is acting as an intermediary. The contractor pays them for this so it's the contractor who wears the trousers and calls the shots.

[Dominic Connor]

Name of the Umberall Co.

Hi everyone. I just gave notice on my brolly company (should have done it months ago, but still) and starting my own Ltd co. My notice period to the umbrella co is 4 weeks. My questions are:

1. They say that now I've given notice I cannot submit any expenses for the remaining 4 weeks - this covers 2 months invoices, which leaves me really out of pocket.

Jonny

I'd be really suprised if this were true, as a simple permie you can submit expenses, do you have this in writing ?

I ask because I'm looking at writing up some more "life as a contractor" articles for The Register and scams make for good pieces.

[malvolio]

I'd be really suprised if this were true, as a simple permie you can submit expenses, do you have this in writing ?

www.hrmc.gov et seq.

I ask because I'm looking at writing up some more "life as a contractor" articles for The Register and scams make for good pieces.

You should maybe start with understanding the differences between employee and contractor then...

Employees have a clear, permanent workplace, therefore any business travel is to a temporary one, subject to the 24 month rules. That doesn't always work for contractors, especially those using umbrellas, where definitions of permanent and temporary workplaces can be confusing. But read my first answer in this thread for the real position (although it turns out that it probably doesn't apply to the OP).

BTW if you want some solid research material to work with, I suggest you go talk to the PCG.

[Dominic Connor]

I'm here to be educated...

Perhaps you could explain to me why he could not claim expenses for the last two months of his contract ?

[LisaContractorUmbrella]

I'd be really suprised if this were true, as a simple permie you can submit expenses, do you have this in writing ?

I ask because I'm looking at writing up some more "life as a contractor" articles for The Register and scams make for good pieces.

This is not a 'scam' - an umbrella company receives no benefit from contractors' expense claims. Either they are a direct reimbursement of costs from the end client in which case, if they are no longer allowable for whatever reason, they will be subject to tax and NI or they are non-chargeable and the contractor will receive tax relief on the cost, again assuming that it's allowable.

[LisaContractorUmbrella]

Perhaps you could explain to me why he could not claim expenses for the last two months of his contract ?

The concept of an over-arching contract is extremely complicated but, basically, it gives continuity of employment to a contractor who is working on a series of assignments under a global employment contract. Travel and subsistence expenses are only allowable when the contractor is travelling to a temporary location and a workplace to which you travel every day knowing that it will be the only workplace you travel to for the remainder of your employment with the umbrella company means that it will be classified by HMRC as a permanent workplace. Therefore, the umbrella company, correctly, disallowed the travel and subsistence costs.

[Wanderer]

Travel and subsistence expenses are only allowable when the contractor is travelling to a temporary location and a workplace to which you travel every day knowing that it will be the only workplace you travel to for the remainder of your employment with the umbrella company means that it will be classified by HMRC as a permanent workplace. Therefore, the umbrella company, correctly, disallowed the travel and subsistence costs.

That was my first impression too but then jonnyguitar clarified that this was NOT his only assignment or workplace and that he had in fact done several assignments while working for the umbrella.

So in the light of this, do you think the expenses should be allowed?

[northernladuk]

That was my first impression too but then jonnyguitar clarified that this was NOT his only assignment or workplace and that he had in fact done several assignments while working for the umbrella.

So in the light of this, do you think the expenses should be allowed?

It's all in here.

[mudskipper]

It's all in here

Interesting - I wonder how many people know that.

So the key is to claim outstanding expenses before giving your notice. Too late for the OP though.