'Self-employment tests' may extend to IT staff'

[MPwannadecentincome]

There is a subtle difference between the two - one that HMRC will latch onto

In the case of a), the extra payments come out of the consultancy's pocket. If the employee were to move closer to client site of their own accord, their travelling expenses would drop according. The employee would receive the same gross income.

For b), the travelling expenses are effectively taken from the contractors gross. If their expenses drop, their (gross) income increases. For a self employed person, this would be fine, but as employees of the umbrella, HMRC will argue that it is effectively commuting costs.

I guess the more subtle difference is

a) is a business

b) is not

[centurian]

a) if you work for a big consultancy and you are on a client site every day (as long as not for more than 2 years at the same site) then the employee gets travel to client site expenses paid tax free.

b) if you work for a brolly and you are on a client site every day (as long as not for more than 2 years at the same site) then HMRC does not want employee to get travel to client site expenses paid tax free.

There is a subtle difference between the two - one that HMRC will latch onto

In the case of a), the extra payments come out of the consultancy's pocket. If the employee were to move closer to client site of their own accord, their travelling expenses would drop according. The employee would receive the same gross income.

For b), the travelling expenses are effectively taken from the contractors gross. If their expenses drop, their (gross) income increases. For a self employed person, this would be fine, but as employees of the umbrella, HMRC will argue that it is effectively commuting costs.

[malvolio]

AND................ The brolly user gets to pay employers AND employees NI for his troubles. It stinks, it really does.

So why use one? It returns the least net from a given gross, even compared to permiedom, and you're not in control of anything. Seems just a little daft to my simple mind.

[Fred Bloggs]

So

a) if you work for a big consultancy and you are on a client site every day (as long as not for more than 2 years at the same site) then the employee gets travel to client site expenses paid tax free.

b) if you work for a brolly and you are on a client site every day (as long as not for more than 2 years at the same site) then HMRC does not want employee to get travel to client site expenses paid tax free.

Great.

AND................ The brolly user gets to pay employers AND employees NI for his troubles. It stinks, it really does.

[Sysman]

Donations to party funds.

For journalists, the power to crush a politician. Or go on a high profile strike.

[HairyArsedBloke]

I always was baffled as to how "entertainers" escape IR35, and many journos too. IIRC, many TV personalities and news-readers are not "employed" by the BBC or ITV, they are self-employed or they use a LtdCo. yet they read the 9 O'clock news every night for years and the revenue doesn't "do" them for IR35.

Hey ho.

Donations to party funds.

[Platypus]

Entertainment, for some reason, have their own rules. Not sure why, it's lost in the mists of time

I always was baffled as to how "entertainers" escape IR35, and many journos too. IIRC, many TV personalities and news-readers are not "employed" by the BBC or ITV, they are self-employed or they use a LtdCo. yet they read the 9 O'clock news every night for years and the revenue doesn't "do" them for IR35.

Hey ho.

[BrilloPad]

I see from that article that they are also targeting building workers.

Good luck to them. Building workers need tools/materials and those sort of invoices are easy to fake.

[Sysman]

Three month rentals are hard to come by; most want six months minumum, which imakes it tricky for the average gig duration. IF you can get one, it is cheaper than B&B or Hotel costs though.

The only time I found a 3 month let was a from a permie who had just moved in with his girlfriend and wanted someone to keep the place warm over winter before he sold it. It can be done if you are lucky.

Entertainment, for some reason, have their own rules. Not sure why, it's lost in the mists of time (perhaps entertainers don't actually work for a living, in HMG's eyes), but the concept of Theatrical Digs is alive and well.

Going back to my payroll days there were some odd looking NI tables for dockers, seamen and sundry other occupations. I assumed these had been negotiated over many years (and probably a few strikes too).

[MPwannadecentincome]

So

a) if you work for a big consultancy and you are on a client site every day (as long as not for more than 2 years at the same site) then the employee gets travel to client site expenses paid tax free.

b) if you work for a brolly and you are on a client site every day (as long as not for more than 2 years at the same site) then HMRC does not want employee to get travel to client site expenses paid tax free.

Great.

[malvolio]

Three month rentals are hard to come by; most want six months minumum, which imakes it tricky for the average gig duration. IF you can get one, it is cheaper than B&B or Hotel costs though.

Entertainment, for some reason, have their own rules. Not sure why, it's lost in the mists of time (perhaps entertainers don't actually work for a living, in HMG's eyes), but the concept of Theatrical Digs is alive and well.

[Sysman]

I see from that article that they are also targeting building workers. They've been doing that for at least 20 years - tax deductions at source were introduced for self-employed construction workers circa 1987(?). I vaguely remember campaigns against "The Lump" (lump sum cash in hand for building work) many years before that.

What they still don't get is that travel costs are a necessary part of doing the work. In practical terms, can you actually rent somewhere for as little as 3 months to cut your costs?

What happens in the entertainment profession? There's another example which can involve a lot of short stints in different places.

[malvolio]

Agreed. It's pretty much certain that LtdCo freelancers will be unaffected. Umbrella users, however, almost invariably don't have a fixed permanent place of work other than their client's site so will fall inside the rules.

You hae to say that this is a direct effect of some Umbrellas taking the mickey with their expense policies, "dispensations", Scale Rates and advertising. Had they all stuck to the rules, nobody would have noticed. Ho hum...

[BrilloPad]

IR35 failed. I cant see that these new measures would fare any better.

It might just kill off umbrellas and get everyone to go limited.

[expat]

'Self-employment tests' may extend to IT staff' on CUK front page.

Last year, HM Revenue & Customs issued a consultation paper entitled 'Tax relief for travel expenses: temporary workers and overarching contracts' aimed directly at umbrella companies and claims for travel expenses. The outcome of this consultation was that there would be a focus on compliance with existing legislation rather than additional legislative changes.
...
The principal effect of Revenue Brief 50/09 is that we will see a targeted drive by HMRC to make sure that they visit all 'high-risk' businesses and carry out a compliance review to identify whether overarching contracts are actually 'sham' contracts to disguise a number of successive separate employments.

Would I be right in suspecting the following?

1. HMRC are probably going to "see through" umbrella companies, to declare that contractors using them are actually undertaking a series of temporary employments.
2. Each of these temporary employments will be treated as any other employment, including the limitation that travelling expenses from the employee's home to the place of work will not be allowable. \The place of work will be the client site.
3. If it works for umbrellas then they will probably apply it to "personal service companies". I.e. no more travelling expenses on your Ltd Co.

To me this would fit perfectly with the authorities' complete inability to grasp that contracting is a career rather than a succession of short jobs.