Taxman is not blameless for non-compliant umbrellas

[PhilAtBFCA]

HMRC and Umbrellas

Bob Jones article is excellent, although quite long it really does set out the position regarding Umbrella Companies, and the fact that HMRC have got themselves into a bit of a bind with the current situation.

There have been quite a few articles on the HMRC brief that came out some of which are mentioned here on our blog, this was written before the CUK article, but at the time I focussed on the opportunities that really do exist now for Professional contractors and freelancers that really want to be in business on their own account .

For those people this HMRC attention to Umbrellas is a big opportunity, especially in the light of recent employment legislation cases, and the up and comming Agency Workers Legislation.

I feel the Umbrella Sector is in for some changes, although I am not going to try and rpedict what will happen. What I do know is that before IR35 and before the MSC legislation there was several mentions in HMRC briefs, and Pre Budget reports about the Govt concern over those areas, so we know that 12 to 24 months before legislation happens there is plenty of Government "hints" that they are going to do something. The current brief is the second hint I have seen, the expenses consultation that has already happened being the first.

To me, all the signs are there with Umbrella Companies that something is going to change at some point....time will tell.

Phil

[Sysman]

My concern as well, although not a brolly user myself. Usual story though - a few wrecking it for the many. Makes you realise why we've been pushing the "only claim what you spend" line for so long though, doesn't it...

A one time theory of mine was that it was "the few" ostentatiously quaffing champagne in The City with Y2K dosh which attracted the attention leading to IR35 in the first place.

I'm sure I'm not the only one who has had a limit on overtime imposed because of the abuses of the few.

[centurian]

The tax system is irrational bullwarks from end to end.

I think I've found the solution. We just need to become MP's.

Even after the expenses fiasco, they still get all travel paid for, with no BIK, yet have the gall to pass law after law that attempts to prevent ordinary folk from getting the same.

[xoggoth]

Sounds rather like the position for agency workers. That's drivel as well.

A sales director on £100k+ a year gets tax-free expenses for visiting a potential client for a week, an agency nurse on a rate equivalent to £30k a year does a week's emergency stint at a hospital and gets nowt tax free.

The tax system is irrational bullwarks from end to end.

PS The solution is sulphuric acid followed by caustic soda, they dissolve most things.

[malvolio]

My concern as well, although not a brolly user myself. Usual story though - a few wrecking it for the many. Makes you realise why we've been pushing the "only claim what you spend" line for so long though, doesn't it...

[centurian]

Too many unbrellas were (are) taking the michael over epxense poilicies and Hector finally noticed (prompted in part by some of the wilder advertising claims from people like Tarpon). The jury is out on what they will come up with, but thre's been a major conasultation exercise and one possible result will be the removeal of T&S from umbrellas, whic will be interesting.

One very informed view on the subject can be seen at http://www.contractingmatters.co.uk/...-another-view/

Would these be something alone the lines of claiming £25 per day for food without needing to keep receipts.

Would be a shame if those making illegal claims spoil it for those claiming genuine T&S. HMRC are known for using the WMD option to deal with problems - caring little about the collateral damage as long as their primary target gets obliterated.

[malvolio]

Too many unbrellas were (are) taking the michael over epxense poilicies and Hector finally noticed (prompted in part by some of the wilder advertising claims from people like Tarpon). The jury is out on what they will come up with, but thre's been a major conasultation exercise and one possible result will be the removeal of T&S from umbrellas, whic will be interesting.

One very informed view on the subject can be seen at http://www.contractingmatters.co.uk/...-another-view/

[centurian]

This one may run and run. Good excuse to rethink getting your own comapny though...

I thought claiming T&S working through an umbrella was pretty safe. Has something changed recently?

It seemed that HMRC were fairly relaxed about it because it was something that only lasted for 2 years maximum and if you are genuinely moving around, then it was a genuine allowance anyway.

Or have they woken up to this and decided to go after T&S through umbrellas.

[Sysman]

My point is not whether one should be expected to move for one's job, it is that "working at one place after another" can be a single job. It is ridiculous to insist that each place is a different job.

Understood. The position when I was self-employed was exactly that - a single job, no matter where my travels took me. I suppose I was the IT equivalent of a shop fitter.

[expat]

My point is not whether one should be expected to move for one's job, it is that "working at one place after another" can be a single job. It is ridiculous to insist that each place is a different job.

[Sysman]

Example: as Bob says, someone who has 4 different assignments in a year is regarded as having 4 different jobs in a year. There seems to be no room for the person who is making one single career out of one short assignment after another.

This law may have made sense when you could actually find a job close to home, but even then it was flawed for the case mentioned. As anyone here who started their careers in or near places with a large manufacturing base, that is no longer true.

To me it is nothing short of ridiculous to say that such a person has 4 careers every year, one after the other, for each of which he can be expected to move hos home close to the place of work.

Isn't it devised by Londoners who have no concept of being forced to relocate for work?

Of course we could all move to the South East, house prices there would boom, and we'd all be in the money!

Er, hang on a moment...

[malvolio]

The 24 month rule is actually very sensible for permies, it only goes a bit pear-shaped when applied to contractiors. The real issue these days is a spin-off from the HMRC's study of umbrella expenses: they have come to the not unreasonable conclusion that an umbrella user's permanent place of work is wherever they happen to be working at that time, since they clearly don't have any other one, unlike LtdCo guys who can rightly claim their registered office is their permanent place of work. Hence not only does the 24 month rule go out the window for brolly users, so does any idea of claiming any travel or susbsistence.

This one may run and run. Good excuse to rethink getting your own comapny though...

[expat]

Interesting article by Bob Jones on CUK front page.

It highlights to me the unfortunate fact that in some cases the problem is that the law is plain wrong at its base. Obviously we would expect HMRC to uphold the law even if it is wrong.

Example: as Bob says, someone who has 4 different assignments in a year is regarded as having 4 different jobs in a year. There seems to be no room for the person who is making one single career out of one short assignment after another.

To me it is nothing short of ridiculous to say that such a person has 4 careers every year, one after the other, for each of which he can be expected to move hos home close to the place of work.

No point in trying to find a loophole within that misguided law. If the law supposes that, the law is a ass.