Just received this from our contact at HMRC

[jamesbrown]

Lastly it is another case of government not thinking this through, they have a problem with too many contractors working through PSC's, so what do they to, encourage thousands of brolly users to go limited! They will then want to block this off in a few years, or even months.

Yeah, you have to wonder about that. It isn't as though they're unaware of this (hence the changes between discussion and consultation of the T&S). I guess they're willing to accept the risk for a short period on the basis that IR35 is a better disincentive against TMI than nothing and it will be reformed very shortly, at which point the umbrellas may ultimately win.

[Crossroads]

I disagree Waldorf. If IR35 caught and using a brolly today then moving to a Ltd and still being IR35 caught won't make much difference will it? Am I missing something?

[DaveB]

I disagree Waldorf. If IR35 caught and using a brolly today then moving to a Ltd and still being IR35 caught won't make much difference will it? Am I missing something?

If you are using a (conventional) brolly you are effectivly IR35 caught anyway. You could move to Ltd and then be outside on the same contract. If you are still IR35 caught as Ltd then you might be a little better off as you wont be paying the brolly fee's but may be paying for an accountant.

[LisaContractorUmbrella]

The removal of T&S effectively puts the final nail in the coffin for umbrella companies. Many brollies will of course start the process of trying to move their clients to PSC's. Many will, so they may salvage something, but most will go permie or via the agency.

Of course an umbrella guiding clients to go limited will contravene the MSC rules! Of course many brollies will at best ignore this or at worst be unaware of what MSC is [emoji33]

Lastly it is another case of government not thinking this through, they have a problem with too many contractors working through PSC's, so what do they to, encourage thousands of brolly users to go limited! They will then want to block this off in a few years, or even months.

Not necessarily. About half our contractors don't claim expenses any way and many are with us even though they could work legitimately outside IR35 just for ease of use

[LisaContractorUmbrella]

Yeah, you have to wonder about that. It isn't as though they're unaware of this (hence the changes between discussion and consultation of the T&S). I guess they're willing to accept the risk for a short period on the basis that IR35 is a better disincentive against TMI than nothing and it will be reformed very shortly, at which point the umbrellas may ultimately win.

What I've never been able to understand is that umbrella companies are easy for HMRC to police - they have thousands of contractors all in one place and RTI and agency reporting means they know who's doing what, where and with whom - by encouraging a move to PSC's they're just making their own job more difficult

[Crossroads]

Agree Dave. But if you are outside IR35 then you are perhaps using a brolly for convenience. If anything I see brollies flourishing... I suspect I would use one if IR35 caught, and no doubt the forthcoming review will aim to catch more by changing the rules.

[colinrobinson]

Travel and subsistence

Travel and Subsistence

The Chancellor made the following announcement today:

3.20 Employment intermediaries and tax relief for travel and subsistence – As confirmed at Summer Budget 2015, the government will legislate to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary, such as an umbrella company or a personal service company. Following consultation, relief will be restricted for individuals working through personal service companies where the intermediaries legislation applies. This change will take effect from 6 April 2016.
April 2016.

The text is at chapter 3.20 in the Blue Book - follow the link:

https://www.gov.uk/government/upload...Accessible.pdf

Draft legislation will be published on 9 December.

Intermediaries legislation - IR35

As you know the government announced at the Summer Budget that HMRC would engage with stakeholders over the summer about the best way to reform the intermediaries legislation (IR35). A discussion document was published on 17 July and HMRC received over 160 written responses in addition to 14 roundtables with stakeholders.

The government is considering responses to the discussion document. The government’s objective as set out in the discussion document is to find a solution that protects the Exchequer and improves fairness in the system without creating disproportionate burdens on business, or widening the scope of the rules.

There was a question raised a while back whether mid week hotel costs (wholly for business) was outside of travel and subsistence. was this ever clarified ?

[LisaContractorUmbrella]

There was a question raised a while back whether mid week hotel costs (wholly for business) was outside of travel and subsistence. was this ever clarified ?

Accommodation is seen as being part of travel and subsistence

[colinrobinson]

Accommodation is seen as being part of travel and subsistence

Cheers With @15k annual spent on accommodation to support long distance contracting, its a deciding factor for me.


If we all started to bill clients as rate plus Expenses like it was in the old days, would they not be able to claim back the expenses as a true cost to their business. They would not be caught by any intermediate legislation. Id then be happy to use umbrella.

[jamesbrown]

What I've never been able to understand is that umbrella companies are easy for HMRC to police - they have thousands of contractors all in one place and RTI and agency reporting means they know who's doing what, where and with whom - by encouraging a move to PSC's they're just making their own job more difficult

As I say, I think this will be temporary, the better of two evils if you like. Either they had to introduce knee-jerk reform of IR35, either directly or preempting it with a SDC test (for example) in the T&S legislation, or they had to slightly tighten the status quo (by retaining T&S subject to IR35) with the risk of a move between umbrellas and PSCs. I don't think that will be tolerated for long. Watch this space for IR35 changes. The next big indication will be the draft FB16 clauses on Dec 9, which should refer to the existing Intermediaries legislation and nothing more sinister.