Leaving umbrella co - charges and no expenses?

[Wanderer]

It's all in here

Contractor Doctor: Why won’t my umbrella let me claim expenses during my notice?

So Parasol's reading of this is that your LAST place of work is your permanent place of work for the entire employment duration even if you have multiple engagements while working for the umbrella? That's not what HMRC say, they say this rule only applies if this is your only work place for the duration of the employment. Read the reference in the contractor doctor article to EIM32125 which says:

A period of attendance at a workplace for a limited duration does not make that place a temporary workplace if the employee attends in the course of a period of continuous work (see EIM32080) that can be expected to last for all, or almost all, of the period for which he or she is likely to hold, or continue to hold, that employment.

The case in point is that the employee attended multiple workplaces so it can be a temporary workplace and travel and subsistence is allowable.

So, at resignation time: single engagement = no more expenses, multiple engagement = expenses allowed.

Blah, the brollies don't care about all this. It's no loss to them and their customer is terminating their relationship anyway so why bother with the admin of figuring out if they worked single or multiple engagements? They will just have a blanket rule that if you resign then your last travel/subsistence claim is disallowed - they don't care if it's right or wrong, that's the end of the story.

[Wanderer]

Interesting - I wonder how many people know that.

To be fair, I think most brollies make it clear that you can't claim subsistence from the time that you know that this will be your only engagement OR if you expect to work in one place for more than 24 months.

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

Correct.

So what could happen is that an employee does a single contract through an umbrella which comes to an end but the employee DOES NOT RESIGN because they intend to take further engagements through the umbrella. (They might think it's unlikely that they will work through the brolly again but hey - never say never).

Some time after they get their expenses approved and final paycheck they change their mind and decide that they won't be working through that umbrella again and they resign.

No rule is broken as long as they can prove that there was the expectation to do multiple assignments since HMRC say that "the effect of the rule is not altered where the expectation does not match the outcome" see EIM32084.

Of course there would be trouble if HMRC prove that the employee never intended to use the umbrella beyond the single engagement but how could they do that? There would always be reasonable doubt. Even if the employee had formed a LTD company, you never know - they may have had a few small IR35 caught jobs lined up that they would have put through the umbrella (except the jobs never came to fruition, oh well).

[LisaContractorUmbrella]

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?

No the OP won't be entitled to claim expenses during the notice period - tbh I wasn't 100% convinced but I ran it past one of my guys here who is an ex-HMRC tax inspector and he has confirmed it

[LisaContractorUmbrella]

So Parasol's reading of this is that your LAST place of work is your permanent place of work for the entire employment duration even if you have multiple engagements while working for the umbrella? That's not what HMRC say, they say this rule only applies if this is your only work place for the duration of the employment. Read the reference in the contractor doctor article to EIM32125 which says:

A period of attendance at a workplace for a limited duration does not make that place a temporary workplace if the employee attends in the course of a period of continuous work (see EIM32080) that can be expected to last for all, or almost all, of the period for which he or she is likely to hold, or continue to hold, that employment.

The case in point is that the employee attended multiple workplaces so it can be a temporary workplace and travel and subsistence is allowable.

So, at resignation time: single engagement = no more expenses, multiple engagement = expenses allowed.

Blah, the brollies don't care about all this. It's no loss to them and their customer is terminating their relationship anyway so why bother with the admin of figuring out if they worked single or multiple engagements? They will just have a blanket rule that if you resign then your last travel/subsistence claim is disallowed - they don't care if it's right or wrong, that's the end of the story.

Not true! We have to care about this sort of thing because if we get it wrong the folks at HMRC won't take too kindly to it and would be likely to

[Wanderer]

No the OP won't be entitled to claim expenses during the notice period - tbh I wasn't 100% convinced but I ran it past one of my guys here who is an ex-HMRC tax inspector and he has confirmed it

Thanks for that, Lisa.

So there we have it folks! At least two major umbrellas work this way, I think they are wrong and I am right but they are the ones who get to interpret HMRC's rules not me so they get the final say.

If people read HMRC's guidance that I cited and they agree with my opinion that the umbrellas are wrong then the work around is DO NOT resign from an umbrella when your contract ends. Continue on the presumption that you are going to have other engagements and only resign after they have paid your final salary payment.....

[Dominic Connor]

Bizarre

I can see the logic of the HMRC even if it is stupid.

So I've learned something.