Reply to: Need clarification on expenses paid directly to my abroad account

[DirtyDog]

Similarly, if there are tax experts in this forum, can you point me to a section(HMRC website) which states the way funds are being transferred (without receipts as expenses) as illegal?

I wouldn't pretend to be a tax expert, but if you are paid a scale rate (which is the only reason that you should be being paid expenses without a receipt) where the expense has not been incurred (which is what you imply here), then that would count as income under Section 62 ITEPA 2003. If you aren't paying tax on your income, then that is tax evasion.

[malvolio]

Thanks for the clarifications.



There are a number of employees working for my company in a similar way. I don't understand how come HMRC/UKBA have been permiting them to operate in such a way?

I am planning to take this with a solicitor, but is there anything I need to be aware of while speaking with a solicitor.
I am not sure whether I can completely trust the solicitor, so in case if there are any Visa experts in this forum, can you point me to a clause/section(UKBA website) which says what I am doing and what my company is doing are illegal?
Similarly, if there are tax experts in this forum, can you point me to a section(HMRC website) which states the way funds are being transferred (without receipts as expenses) as illegal?
If I have a better understanding of this, it will be easy for me to discuss with my solicitor.

Snag is you're dealing with immigration, taxation and employment law simultaneously; you need a smart solicitor to unravel the actual position.

Can I suggest you have a word with the PCG first. They have been following this whole visa abuse issue for years and understand the problem rather well. One of the problems we contractors face in stopping this is the lack of evidence about how these things are arranged; your experience could be quite valuable.

Contact page is here

[pramo]

Thanks for the clarifications.

Your understanding of visa and immigration law is wrong. You are breaking the law and so is the company.

There are a number of employees working for my company in a similar way. I don't understand how come HMRC/UKBA have been permiting them to operate in such a way?

I am planning to take this with a solicitor, but is there anything I need to be aware of while speaking with a solicitor.
I am not sure whether I can completely trust the solicitor, so in case if there are any Visa experts in this forum, can you point me to a clause/section(UKBA website) which says what I am doing and what my company is doing are illegal?
Similarly, if there are tax experts in this forum, can you point me to a section(HMRC website) which states the way funds are being transferred (without receipts as expenses) as illegal?
If I have a better understanding of this, it will be easy for me to discuss with my solicitor.

[cojak]

I've just noticed this thread - the very title in the Umbrella Companies forum set off alarm bells.

[CoolCat]

I need to check with them on this.
May I know what does a scale rate mean?
Even if the expense payment is legitimate, I am quite confused as the payment is made directly from a UAE account to my NRI Indian account. If it was legitimate, it should be made directly to my UK account right?



From my understanding of the Tier 2 General Visa, the employer thinks that there is a shortage for a specific skillset and then sponsors Visa for a person so that he (the person being sponsored) can work directly with the sponsor's clients? There is no tie-up between the person being sponsored and the agent's(my employer who sponsors me) client.
In my case too, though I search for the job myself and work with the client directly, the agreement is between the client and my employer (The client has the agreement with my sponsor(my employer who signs the agreement on my behalf)). So does this mean, the immigration law is being exploited/broken as my understanding was that the issue had nothing to do with the Visa but instead with the tax evasion?



My agency is listed there, I've already checked this.



Exactly, this is how an onsite model is and major companies take this route. That is why recently changes were made to the visa rules so that the employees were paid the minimum ~40K.
But my question is, is this process which you've explained legal, meaning is my employer exploiting a loophole in the tax process (as he is paying directly to my Indian NRI account from a UAE account)?

Your understanding of visa and immigration law is wrong. You are breaking the law and so is the company.

[malvolio]

Exactly, this is how an onsite model is and major companies take this route. That is why recently changes were made to the visa rules so that the employees were paid the minimum ~40K.
But my question is, is this process which you've explained legal, meaning is my employer exploiting a loophole in the tax process (as he is paying directly to my Indian NRI account from a UAE account)?

Exactly, this is how non-UK companies are ripping off UK workers by ignoring the rules, telling the BIS one thing and doing another and keeping all such matters secret so there is no evidence of what they are doing.

It is not only illegal it's killing the UK market. There is no skills shortage in IT roles at all for example, but somehow there are 20-30,000 non-EU IT workers in the country doing a poor job and 20,000 UK-educated IT graduates with no jobs. You want a skills shortage, advertise a skilled technical role at an unrealistic £90 a day and when nobody applies you have a skills shortage. then ship in someone, pay them peanuts and evade the taxes that are properly due.

Good business model, isn't it.

[pramo]

You might want to ask your employer these questions.
If they are paying expenses, then they should have a clear record of what you are claiming (and so should you) - ask if they are paying on a scale rate, or whether they have a dispensation which means that the expenses do not need to be included on a P11D. Note that just because they have a dispensation, that doesn't mean that YOU don't need to keep a record of what expenses you are claiming and what they are for.

I need to check with them on this.
May I know what does a scale rate mean?
Even if the expense payment is legitimate, I am quite confused as the payment is made directly from a UAE account to my NRI Indian account. If it was legitimate, it should be made directly to my UK account right?

But more importantly they are definitely (and you are too) breaking immigration law, as you are absolutely not allowed to operate like this in the UK on the type of visa you have.
You should report your employer to the authorities yourself.

From my understanding of the Tier 2 General Visa, the employer thinks that there is a shortage for a specific skillset and then sponsors Visa for a person so that he (the person being sponsored) can work directly with the sponsor's clients? There is no tie-up between the person being sponsored and the agent's(my employer who sponsors me) client.
In my case too, though I search for the job myself and work with the client directly, the agreement is between the client and my employer (The client has the agreement with my sponsor(my employer who signs the agreement on my behalf)). So does this mean, the immigration law is being exploited/broken as my understanding was that the issue had nothing to do with the Visa but instead with the tax evasion?

Visa sponsors have to be licensed http://www.ukba.homeoffice.gov.uk/si...sterofsponsors.
If the OP's 'agency' is not on there then he should report them to the UKBA.

My agency is listed there, I've already checked this.

One of the interesting variations on getting around the visa rules on remuneration is to pay the worker something in the UK and grant expenses to be repaid to the home country directly for the costs of them being over here.

Exactly, this is how an onsite model is and major companies take this route. That is why recently changes were made to the visa rules so that the employees were paid the minimum ~40K.
But my question is, is this process which you've explained legal, meaning is my employer exploiting a loophole in the tax process (as he is paying directly to my Indian NRI account from a UAE account)?

[malvolio]

I think it is more a case of them charging him for his visa sponsorship rather than charging him to find work. Sounds very dubious.

One of the interesting variations on getting around the visa rules on remuneration is to pay the worker something in the UK and grant expenses to be repaid to the home country directly for the costs of them being over here. You then total it all up and say that you're paying the guy £40k when in fact he's on about £15k. You also ignore the tax element on the expenses element since they are expenses after all and so cannot attract a BIK - although they are not expense that the worker has incurred of course, but we'll let that slide...

Whatever, this is how you can bring in a worker, pay them sod all, meet the local payment rules for visa'd worker and make lots of money by taking our jobs away since we can't work for four pence an hour.

And the fact that the OP isn't totally clear on how he is being paid, and how much, speaks volumes. At least he has enough sense and intelligence to ask.

[LisaContractorUmbrella]

Visa sponsors have to be licensed http://www.ukba.homeoffice.gov.uk/si...sterofsponsors. If the OP's 'agency' is not on there then he should report them to the UKBA.

This whole set up sounds like a complete sham

[northernladuk]

I think you need to talk to a lawyer (or at the very least the PCG, who would be very interested in your "employer's" arrangements). You are not only being royally ripped off (for example, you can't be charged for job seeking services) you shouldn't even be working here.

I think it is more a case of them charging him for his visa sponsorship rather than charging him to find work. Sounds very dubious.

[CoolCat]

I didn't fill P11D, the P60 figures shows only my salary and the tax deducted on it. I don't have any details regarding the expenses etc.
What I am worried about is since I rely on my employer to pay the taxes properly and I am not an expert in this area, I am not sure whether this would also affect me?
Or may be my employer is exploiting any loopholes in the taxation process in which case he can get away from this even if HMRC does spot something fishy?


True, so I am their employee, but I need to find contracts on my own, if not I wouldn't be paid. So I need to find contracts on my own though my employer does say he would help me find contracts. Once I find a contract, a % of my daily contract fee goes to him. If I am without contracts in between, I won't get paid.

To cut things short, my worry is more along these lines.
Will I face the consequences due to my employer who seems to exploit loopholes in the taxation policies?
Is this a loophole which my employer is exploiting or is this activity illegal?

Your employer maybe breaking tax law, its hard to tell with the information you have given.

But more importantly they are definitely (and you are too) breaking immigration law, as you are absolutely not allowed to operate like this in the UK on the type of visa you have. You should report your employer to the authorities yourself.

Sorry about that but thats the way it is.

[DirtyDog]

I didn't fill P11D, the P60 figures shows only my salary and the tax deducted on it. I don't have any details regarding the expenses etc.
What I am worried about is since I rely on my employer to pay the taxes properly and I am not an expert in this area, I am not sure whether this would also affect me?
Or may be my employer is exploiting any loopholes in the taxation process in which case he can get away from this even if HMRC does spot something fishy?

You might want to ask your employer these questions. If they are paying expenses, then they should have a clear record of what you are claiming (and so should you) - ask if they are paying on a scale rate, or whether they have a dispensation which means that the expenses do not need to be included on a P11D. Note that just because they have a dispensation, that doesn't mean that YOU don't need to keep a record of what expenses you are claiming and what they are for.

Income tax is a personal commitment, so HMRC would come to you for the shortfall and any penalties which might occur. Ignorance is no defence.

Will I face the consequences due to my employer who seems to exploit loopholes in the taxation policies?
Is this a loophole which my employer is exploiting or is this activity illegal?

If you aren't paying enough tax, then it's your responsibility to make sure that you are. If HMRC investigate, you'd better make sure you know what has been paid, and what has been reimbursed (and for what). If there is a discrepancy, then you'll be in trouble.

If it's a valid expense, then there is nothing wrong with reimbursing the expenses you are due. If it isn't a valid expense, then it's an attempt to avoid PAYE and National Insurance contributions, which would be tax evasion. Start working on your defence now.

[malvolio]

I didn't fill P11D, the P60 figures shows only my salary and the tax deducted on it. I don't have any details regarding the expenses etc.
What I am worried about is since I rely on my employer to pay the taxes properly and I am not an expert in this area, I am not sure whether this would also affect me?
Or may be my employer is exploiting any loopholes in the taxation process in which case he can get away from this even if HMRC does spot something fishy?


True, so I am their employee, but I need to find contracts on my own, if not I wouldn't be paid. So I need to find contracts on my own though my employer does say he would help me find contracts. Once I find a contract, a % of my daily contract fee goes to him. If I am without contracts in between, I won't get paid.

To cut things short, my worry is more along these lines.
Will I face the consequences due to my employer who seems to exploit loopholes in the taxation policies?
Is this a loophole which my employer is exploiting or is this activity illegal?

I think you need to talk to a lawyer (or at the very least the PCG, who would be very interested in your "employer's" arrangements). You are not only being royally ripped off (for example, you can't be charged for job seeking services) you shouldn't even be working here.

[pramo]

If you are not claiming the expenses, but they are just saying "oh, here's a load of expense money", then that would be a tax evasion measure.
Do you complete a self assessment tax return? If so, what figures are you putting down? What does your P60 show, and what does your P11D show?

I didn't fill P11D, the P60 figures shows only my salary and the tax deducted on it. I don't have any details regarding the expenses etc.
What I am worried about is since I rely on my employer to pay the taxes properly and I am not an expert in this area, I am not sure whether this would also affect me?
Or may be my employer is exploiting any loopholes in the taxation process in which case he can get away from this even if HMRC does spot something fishy?

Tier 2 visas are tied to jobs, so having one while finding your own work means someone is breaking at least one law.

True, so I am their employee, but I need to find contracts on my own, if not I wouldn't be paid. So I need to find contracts on my own though my employer does say he would help me find contracts. Once I find a contract, a % of my daily contract fee goes to him. If I am without contracts in between, I won't get paid.

To cut things short, my worry is more along these lines.
Will I face the consequences due to my employer who seems to exploit loopholes in the taxation policies?
Is this a loophole which my employer is exploiting or is this activity illegal?

[pramo]

If you are not claiming the expenses, but they are just saying "oh, here's a load of expense money", then that would be a tax evasion measure.
Do you complete a self assessment tax return? If so, what figures are you putting down? What does your P60 show, and what does your P11D show?

I didn't fill P11D, the P60 figures shows only my salary and the tax deducted on it. I don't have any details regarding the expenses etc.
What I am worried about is since I rely on my employer to pay the taxes properly and I am not an expert in this area, I am not sure whether this would also affect me?
Or may be my employer is exploiting any loopholes in the taxation process in which case he can get away from this even if HMRC does spot something fishy?

Tier 2 visas are tied to jobs, so having one while finding your own work means someone is breaking at least one law.

True, so I am their employee, but I need to find contracts on my own, if not I wouldn't be paid. So I need to find contracts on my own though my employer does say he would help me find contracts. Once I find a contract, a % of my daily contract fee goes to him. If I am without contracts in between, I won't get paid.

To cut things short, my worry is more along these lines.
Will I face the consequences due to my employer who seems to exploit loopholes in the taxation policies?
Is this a loophole which my employer is exploiting or is this activity illegal?