Indeed, HMRC confirmed to us that if you’re a contractor who works through a recruitment agency, you are automatically going to be considered under Supervision, Direction or Control (SDC), or the right of these, for the purpose of the new legislation prohibiting tax relief on travel and subsistence expenses.
In other words, where a contractor supplies their personal services through an umbrella or limited company, there will be a “presumption” that there is SDC, or the right of SDC, if the contractor is engaged through an employment agency and as such, your travel and subsistence expenses will not be eligible for tax relief
This automatic opt-in to SDC all stems from a single and rather innocuous-sounding sentence on page 14 of the SDC consultation by HM Revenue & Customs, which states:
“This test will be applied in a similar away to that currently used for agency workers in Section 44 (2) of ITEPA.”
Well, Section 44 (2) of ITEPA states that where a worker is engaged by or through an agency, there will be a presumption that there is Supervision, Direction, or Control (or the right of these) over the worker.
Consequently, if the SDC proposal on travel and subsistence goes through, without alteration, then, regardless of whether there is Supervision, Direction or Control in reality, such Supervision, Direction or Control will be presupposed once contractors secure their contract through a recruitment agency.
So all contractors that work through agencies will automatically be in the position where they can no longer claim travel and subsistence expenses, once the current proposal passes into law from April 2016.
In other words, where a contractor supplies their personal services through an umbrella or limited company, there will be a “presumption” that there is SDC, or the right of SDC, if the contractor is engaged through an employment agency and as such, your travel and subsistence expenses will not be eligible for tax relief
This automatic opt-in to SDC all stems from a single and rather innocuous-sounding sentence on page 14 of the SDC consultation by HM Revenue & Customs, which states:
“This test will be applied in a similar away to that currently used for agency workers in Section 44 (2) of ITEPA.”
Well, Section 44 (2) of ITEPA states that where a worker is engaged by or through an agency, there will be a presumption that there is Supervision, Direction, or Control (or the right of these) over the worker.
Consequently, if the SDC proposal on travel and subsistence goes through, without alteration, then, regardless of whether there is Supervision, Direction or Control in reality, such Supervision, Direction or Control will be presupposed once contractors secure their contract through a recruitment agency.
So all contractors that work through agencies will automatically be in the position where they can no longer claim travel and subsistence expenses, once the current proposal passes into law from April 2016.
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