Reply to: Autumn Statement - Umbrella Companies

[Forbes Young]

Nope this will be a different one - there are consultations going on all the time - I think the Government like us to feel needed

Yes - best wait until they actually bring in legislation rather than worry about HMRC discussions - they've been contemplating changes to IR35/personal service companies/umbrella companies etc etc for years.

[LisaContractorUmbrella]

Would that be the same consultation process that gave us the recent APN legislation?

Nope this will be a different one - there are consultations going on all the time - I think the Government like us to feel needed

[slatt]

They refer to a consultation so nothing will be pre-determined otherwise they would just be introducing new legislation

Would that be the same consultation process that gave us the recent APN legislation?

[LisaContractorUmbrella]

The web page I took the snippet from was entitled "New rules for business travel and gifts" (BBC News - New rules for business travel and gifts)
Here's a bit more from that page, including the snippet in context..

Travel and umbrella companies
...Some umbrella companies argue that each of these contracts is temporary, and so their employees can get tax relief on all their reimbursed travel costs. The government is now to launch a consultation on the use of travel rules by umbrella companies, which will "inform potential future action". The Autumn Statement anticipates that this will increase the Treasury's tax take by £120m in 2016-17, so any changes are likely to take effect from April next year.

They refer to a consultation so nothing will be pre-determined otherwise they would just be introducing new legislation

[SunnyInHades]

The web page I took the snippet from was entitled "New rules for business travel and gifts" (BBC News - New rules for business travel and gifts)
Here's a bit more from that page, including the snippet in context..

Travel and umbrella companies
...Some umbrella companies argue that each of these contracts is temporary, and so their employees can get tax relief on all their reimbursed travel costs. The government is now to launch a consultation on the use of travel rules by umbrella companies, which will "inform potential future action". The Autumn Statement anticipates that this will increase the Treasury's tax take by £120m in 2016-17, so any changes are likely to take effect from April next year.

[LisaContractorUmbrella]

BBC website update yesterday .. "The Autumn Statement anticipates that this will increase the Treasury's tax take by £120m in 2016-17, so any changes are likely to take effect from April next year."

So no more umbrella travel expenses after April ?

The Government is looking at Pay Day by Pay Day models which were designed for low paid workers (at or around minimum wage) and which allow the workers to 'sacrifice' some of their earnings which are then processed by the scheme provider as 'expenses' thereby giving tax relief to the worker and depriving the Treasury of funds. The problem with these schemes is that the process results in the workers income being pushed below minimum wage in many cases; the scheme operators will also usually engage the workers on a zero hours contract which affords them no rights whatsoever, as opposed to an over-arching contract of employment which guarantees hours and does give the workers employment rights. Unfortunately for our industry the term 'umbrella company' is used by offshore scheme providers, pay day by pay day scheme providers, models which require the worker to register as a sole trader etc etc - all of these will lose the Treasury money and deprive workers of rights which is why HMG doesn't like them.

I think what will happen is that HMRC will look at all those business models that have been shoved under the heading of 'umbrella company' and legislate against those that they consider are not compliant. If I'm wrong and they did decide that umbrella travel expenses were not allowable then thousands of contractors would set up Ltd Co and work outside IR35 knowing HMRC haven't got much power to police which would mean losses to the Exchequer. They may be daft but they're not that daft.

[SunnyInHades]

BBC website update yesterday .. "The Autumn Statement anticipates that this will increase the Treasury's tax take by £120m in 2016-17, so any changes are likely to take effect from April next year."

So no more umbrella travel expenses after April ?

[Batcher]

Enter the FLC. More on that to come soon, I imagine.

Nail hit on head.

[LisaContractorUmbrella]

Oye! Watch how you talk to Lisa. Geddit?

[Zero Liability]

Would such companies be to sit in on any relevant court cases as well?

Ah well - contractors shouldn't worry. If you wanted maximum value for your contracting day you should be going Limited anyway, surely?

Enter the FLC. More on that to come soon, I imagine.

[PerfectStorm]

Would such companies be invited to sit in on any relevant court cases as well?

Ah well - contractors shouldn't worry. If you wanted maximum value for your contracting day you should be going Limited anyway, surely?

[BolshieBastard]

What do you mean you will be sitting in? You and indeed anyone else can contribute to the consultation but lets not pretend that you have a privileged status. .

Oye! Watch how you talk to Lisa. Geddit?

[tractor]

...

There's a table, and only some people get invited to sit at the table. Sometimes, there's a party and only some people will get invited to go to the party. If you are going to disagree with anything that HMRC are going to say, then you won't be invited to sit at the table or go to the party. So you should always agree with HMRC, even if you don't know what you want to happen, just to get an invite to the party and a seat at the table.

That's what I've learned from the IPSE forums over the past few weeks.

You cannot just get 'in'.

You also have to bring 'gifts'

I know, I was told by someone who can never, ever be wrong. Repeatedly until his head hurt. I think he's having a lie down atm.

[slatt]

What do you mean you will be sitting in? You and indeed anyone else can contribute to the consultation but lets not pretend that you have a privileged status.

Everyone is equal, some are just more equal than others...

[TheFaQQer]

What do you mean you will be sitting in? You and indeed anyone else can contribute to the consultation but lets not pretend that you have a privileged status.

There's a table, and only some people get invited to sit at the table. Sometimes, there's a party and only some people will get invited to go to the party. If you are going to disagree with anything that HMRC are going to say, then you won't be invited to sit at the table or go to the party. So you should always agree with HMRC, even if you don't know what you want to happen, just to get an invite to the party and a seat at the table.

That's what I've learned from the IPSE forums over the past few weeks.