Reply to: Umbrella Expenses

[Rialto99]

Rialto99, I have just answered the last part to question 2,

Thanks Kylie, really appreciate your input.

R

[Kylie4485]

Rialto99, I have just answered the last part to question 2,

[Kylie4485]

Its not a guarantee, contractors can leave pretty much any Umbrella company they choose.
All the Umbrella companies that have an 'over-arching' contract have this clause in their contract of employement that is roughly 336 give or take, they place this figure in their dispensation to send off to the Revenue an the HR approve it or not.

I believe Parasol brought up the 'over-arching' contract with the HMRC and suggested 330 hours, which was agreed, and the other brollies followed.

If however your intention is to work on a single assignment and then leave employment, the place of your assignment becomes your permanent workplace and travel between home and office is treated as normal commuting and therefore not an allowable business expense.

There is no exact figure quoted anywhere by the revenue, I am just stating to you what is happening. I suppose the brollie puts forward a figure and the revenue agree with what they feel comfortable with.

[TheFaQQer]

Hi guys, your not rude when you give me an explanation of why you disagree with a quote i make, but when you don't and say I am talking carp, I take that as rude, oh well lets move on

The first I got from an specific site, got accused of spamming last time I mentioned it (not Umbrella Company)

The second from www.accountingweb.co.uk by a lady called Rebecca Benneyworth, who seems to know her stuff.

The last is from an actual Umbrella companies, contract of employment, so its not there marketing material, I agree with them, but I don't like them, so I'm not going to give them the benefit of a link.

It's the last bit that I have issue with - the implication that if I don't work for 330 hours I wouldn't be classed as a contractor, which is rubbish. It sounds like standard umbrella rubbish, to be honest. It's more likely in there as a "guarantee" that you can't go elsewhere until you've worked your 330 hours through them.

[Kylie4485]

Hi guys, your not rude when you give me an explanation of why you disagree with a quote i make, but when you don't and say I am talking carp, I take that as rude, oh well lets move on

The first I got from an specific site, got accused of spamming last time I mentioned it (not Umbrella Company)

The second from www.accountingweb.co.uk by a lady called Rebecca Benneyworth, who seems to know her stuff.

The last is from an actual Umbrella companies, contract of employment, so its not there marketing material, I agree with them, but I don't like them, so I'm not going to give them the benefit of a link.

[NotAllThere]

I Should not even give you an explanation, you was so rude

That should be "were so rude". And I was not. Now put your toys back in the pram and don't be so precious.

So, what's the source of the quotes? They look like standard umbrella advertising gumpf.

[Bluebird]

I would love to, but being told what I am saying is carp, its not very welcoming, text from different sources:

"It is important to establish that you are a professional contractor from the outset and that you intend to seek a succession of assignments through an Umbrella Company. An umbrella companies contract of employment is an ‘over-arching' contract and enables you to establish your permanent work place at your home. You will use your home office to find new (successive) assignments, to undertake skills training, to use as a base to travel to your temporary assignments and to complete the paperwork for your current assignment. Your assignments (of limited duration - less than 24 months) take place at temporary workplaces."

"an “overarching” contract, under which a number of separate postings are made then the normal temporary workplace rules can apply. Where the contracts of employment are successive separate contracts no expenses will be deductible at all if the employee spends or is likely to spend most of his time at the same site."

An over-arching term from a contract of employment:
"As a minimum we do however guarentee that you will be offered at least 336 hours of paid work over the course of any full 12 month period of employment commencing on the start date." That term has been viewed by revenue.

I Should not even give you an explanation, you was so rude

The first part is quite correct - It's saying that your permanent place of work is your home, and any other place you attend is a temporary workplace [ subject to the 24 month rule ] and you are therefore able to claim expenses which can be used to off-set the tax you pay.

The 2nd part is the bit thats Carp - who is giving you "guarenteed 336 hours of paid work" - and even if they do - why would anybody who works any less not be a "proper contractor" ?

[TheFaQQer]

I would love to, but being told what I am saying is carp, its not very welcoming, text from different sources:

"It is important to establish that you are a professional contractor from the outset and that you intend to seek a succession of assignments through an Umbrella Company. An umbrella companies contract of employment is an ‘over-arching' contract and enables you to establish your permanent work place at your home. You will use your home office to find new (successive) assignments, to undertake skills training, to use as a base to travel to your temporary assignments and to complete the paperwork for your current assignment. Your assignments (of limited duration - less than 24 months) take place at temporary workplaces."

"an “overarching” contract, under which a number of separate postings are made then the normal temporary workplace rules can apply. Where the contracts of employment are successive separate contracts no expenses will be deductible at all if the employee spends or is likely to spend most of his time at the same site."

An over-arching term from a contract of employment:
"As a minimum we do however guarentee that you will be offered at least 336 hours of paid work over the course of any full 12 month period of employment commencing on the start date." That term has been viewed by revenue.

I Should not even give you an explanation, you was so rude

What's the source for the quote, though?

[Kylie4485]

I would love to, but being told what I am saying is carp, its not very welcoming, text from different sources:

"It is important to establish that you are a professional contractor from the outset and that you intend to seek a succession of assignments through an Umbrella Company. An umbrella companies contract of employment is an ‘over-arching' contract and enables you to establish your permanent work place at your home. You will use your home office to find new (successive) assignments, to undertake skills training, to use as a base to travel to your temporary assignments and to complete the paperwork for your current assignment. Your assignments (of limited duration - less than 24 months) take place at temporary workplaces."

"an “overarching” contract, under which a number of separate postings are made then the normal temporary workplace rules can apply. Where the contracts of employment are successive separate contracts no expenses will be deductible at all if the employee spends or is likely to spend most of his time at the same site."

An over-arching term from a contract of employment:
"As a minimum we do however guarentee that you will be offered at least 336 hours of paid work over the course of any full 12 month period of employment commencing on the start date." That term has been viewed by revenue.

I Should not even give you an explanation, you was so rude

[NotAllThere]

ok boys, whatever you say

Well, would you care to back up what you've said?

[Damo1176]

Umm, a very interesting debate indeed!

So back to my original question then, how on earth can a company such as Parasol (1,000s of contractors, endorsed by the PCG!) continue to process and offset expenses (let alone non-receipted dispensation expenses) to reduce contractor's tax bills if the contractor's place of work (as in the place of work he goes to every day for a particular assignment) is classed as a Permanent Workplace?

If the answer is "they can offset the expenses, it's just not strictly allowable therefore you will have to repay any tax you've saved by claiming these expenses" then what the **** is the point in an Umbrella Company and why the h3ll are there so many out there?!

Sorry for my foul language...please forgive me

R

According to info I have read a place does not become your permanent workplace until you've been there for 2 years or to the pont you knoiw it will cotninue beyond 2 years.

My previous job I worked in one place for ages but then the company asked me to commute to another location for the foreesable future but still my permie location was my previous location, I claimed expenses for it (to the company) and alsdo got tax back on some of it. After 2 years this was not recognised anymore and my permie location changed, expenses over!

[Rialto99]

Thanks Mal - I appreciate your advice. With all this in mind then, 1. how can Umbrellas justify processing contractor expenses (mileage to / from the temp / perm workplace) and therefore reduce your tax bill if these expenses are indeed not allowable?, surely Umbrellas would all go out of business if contractors couldn't legally offset their tax bill in this way...

2. Who has to pay back the tax saved (by claiming such expenses) if / when HMRC audit the Umbrella?

Thinking about it logically, surely over the last (say) 7 years HMRC have indeed audited several Umbrella Companies (maybe 100's) and not pulled them up on this generic 'incorrect' treatment of the expenses legislation. Otherwise how on earth can a company such as Parasol (1,000s of contractors) continue to process and offset expenses to reduce contractor's tax bills?

R

Umm, a very interesting debate indeed!

So back to my original question then, how on earth can a company such as Parasol (1,000s of contractors, endorsed by the PCG!) continue to process and offset expenses (let alone non-receipted dispensation expenses) to reduce contractor's tax bills if the contractor's place of work (as in the place of work he goes to every day for a particular assignment) is classed as a Permanent Workplace?

If the answer is "they can offset the expenses, it's just not strictly allowable therefore you will have to repay any tax you've saved by claiming these expenses" then what the **** is the point in an Umbrella Company and why the h3ll are there so many out there?!

Sorry for my foul language...please forgive me

R

[Kylie4485]

ok boys, whatever you say

[Bluebird]

1. the over-arching contract is a term in your contract of employment.

Without this term a first time contractor should not be claiming expenses. Only professional contractors are allowed to claim for expenses (professionals contractor classed as have worked at least 330 hours in a year)

The term basically means that you have the intension to carry on contracting after your first one.

2. When you go through an Umbrella Company, your home is classed as your permanent place of work.

carp.

[TheFaQQer]

1. the over-arching contract is a term in your contract of employment.

Without this term a first time contractor should not be claiming expenses. Only professional contractors are allowed to claim for expenses (professionals contractor classed as have worked at least 330 hours in a year)

The term basically means that you have the intension to carry on contracting after your first one.

2. When you go through an Umbrella Company, your home is classed as your permanent place of work.

Where did you get the figure of 330 hours from?

What you are saying is that if I work for one month a year and then don't bother with the rest of the year (which I could do), I wouldn't be able to claim expenses because I wasn't a "professional contractor"?