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Umbrella Companies that process expenses properly

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    #11
    What is the usual process for claiming expenses? The end client wants the daily rate to cover it all but send me to offices all over the UK. Easy as pie to deal with if the contract was Outside via Ltd, but for an inside contract who in the chain is responsible for carving those expenses out of the daily rate before PAYE is applied?

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      #12
      Originally posted by breaktwister View Post
      What is the usual process for claiming expenses? The end client wants the daily rate to cover it all but send me to offices all over the UK. Easy as pie to deal with via Ltd, but who in the chain is responsible for carving those expenses out of the daily rate before PAYE is applied?
      No-one because that isn't possible under both HMRC and employment rules....

      Edit - to add the reason why

      As a limited Company you take all the risk but that isn't possible as an employee because you need to be paid both minimum wage and a consistent weekly wage (including bonuses where appropriate) for the work you do.

      So the risk needs to reside elsewhere in the chain with you receiving a consistent weekly wage with the risk (profit / loss) on the expenses taken from elsewhere.

      Now a few umbrellas did have a model that allowed a fixed amount to be kept to one side for expenses but there are so many problems there I don't want to begin covering them...

      1 question I would ask is why this is inside IR35 - the risk on expenses is financial and points almost by itself into the contract being outside IR35.
      Last edited by eek; 10 August 2022, 13:29.
      merely at clientco for the entertainment

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        #13
        Who knows eek, the client decided that the role is inside, I believe a lot of it is direction from Legal/HR. The umbrellas must have been given guidance from HMRC as I have checked with three firms and they all say "if SDC applies then there is no travel expenses" which is not the correct test in law, the correct test is whether the travel is part of the ordinary commute or not. Perhaps I am missing something? Is there any use writing to the Umbrella regulator or are they as useless as all other regulators?

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          #14
          Originally posted by breaktwister View Post
          Who knows eek, the client decided that the role is inside, I believe a lot of it is direction from Legal/HR. The umbrellas must have been given guidance from HMRC as I have checked with three firms and they all say "if SDC applies then there is no travel expenses" which is not the correct test in law, the correct test is whether the travel is part of the ordinary commute or not. Perhaps I am missing something? Is there any use writing to the Umbrella regulator or are they as useless as all other regulators?
          There is no such thing as an umbrella regulator - FCSA / Professional Passport are Accreditations

          As for what you missed - I think it's this bit "as an employee you need to be paid a consistent daily / weekly wage (including bonuses where appropriate) for the work you do." (and that's a very large can of worms when it comes to a number of issues umbrella firms are trying to deal with at the moment). So while that SDC comment isn't 100% correct it's correct as far as compliant umbrellas are concerned.

          Basically your only option is for the end client or agency to swallow the risk and for you to identify a daily rate before expenses that is acceptable and move the risk elsewhere.

          I would throw it back to their Legal / HR - what they are asking for is impossible - so it's their move.
          Last edited by eek; 10 August 2022, 16:09.
          merely at clientco for the entertainment

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            #15
            Thanks again eek. The problem I see is that IR35 determination is outside the remit of most tech hiring managers, they will have been told, blanket decision if you like, that all roles are to be inside IR35.
            Last edited by breaktwister; 10 August 2022, 16:18.

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              #16
              Originally posted by breaktwister View Post
              Thanks again eek. The problem I see is that IR35 determination is outside the remit of most tech hiring managers, they will have been told, blanket decision if you like, that all roles are to be inside IR35.
              Yep - I can see that but it makes their desire for the work to be done as a fixed fee impossible so the risk needs to sit at either the agency or end client level.

              And we all know no agency is going to accept it so it will end up at the end client with you filling in piles of expense claims.

              Edit - a quick google brought up Claiming expenses as an Umbrella company employee | An Award Winning Umbrella Company | Contractor Umbrella which contains the following

              . Whereas Umbrella companies were previously able to allow contractors to claim many expenses in addition to travel and subsistence, this is no longer the case. Expenses can still be paid – but these must be approved by your recruitment agency and paid over in addition to your normal daily or hourly pay rate. This matches the treatment that permanent, full-time employees can expect – expenses must be submitted, approved and reimbursed on top of salary. These are known as chargeable expenses.

              ...

              As above, expenses must be approved and paid by your recruitment agency – due to the tightening of legislation, a compliant umbrella company will not allow you to claim these directly through them.
              Last edited by eek; 10 August 2022, 16:32.
              merely at clientco for the entertainment

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                #17
                The relevant legislation is here: https://www.legislation.gov.uk/ukpga...ravel-expenses. s337 and s338 are entirely sensible but it seems they added s339A for "employment intermediaries" at some point, and although that section does not specifically say that s337 and s338 do not apply to umbrella workers for some reason the industry is treating it as such. I will do some more digging around this 339A but it certainly seems at this stage that I will be applying for perm roles.

                EDIT: the more I read about s339A the more I think the issue lies elsewhere. At this point I am at a loss as to where the legisation states that umbrella companies cannot process properly incurred travel expenses outside the normal commute. As to the writer from your link eek "due to tightening of legislation (which legislation!) a compliant umbrella company will not allow you to claim these (legally allowable) expenses through them".
                Last edited by breaktwister; 10 August 2022, 17:17.

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                  #18
                  Originally posted by breaktwister View Post
                  The relevant legislation is here: https://www.legislation.gov.uk/ukpga...ravel-expenses. s337 and s338 are entirely sensible but it seems they added s339A for "employment intermediaries" at some point, and although that section does not specifically say that s337 and s338 do not apply to umbrella workers for some reason the industry is treating it as such. I will do some more digging around this 339A but it certainly seems at this stage that I will be applying for perm roles.

                  EDIT: the more I read about s339A the more I think the issue lies elsewhere. At this point I am at a loss as to where the legisation states that umbrella companies cannot process properly incurred travel expenses outside the normal commute. As to the writer from your link eek "due to tightening of legislation (which legislation!) a compliant umbrella company will not allow you to claim these (legally allowable) expenses through them".
                  Again I will repeat "as an employee you need to be paid a consistent daily / weekly wage (including bonuses where appropriate) for the work you do."

                  And if you are using part of the money received to pay fluctuating expenses that simply isn't possible.

                  That has nothing to do with expenses - it has everything to do with generic employment law...

                  As I hinted early - one umbrella firm got round this issue for a while but has stopped doing so for multiple reasons. One of which was that their "with SDC expenses" service was seriously seriously profitable for the umbrella owner but people noticed....
                  Last edited by eek; 10 August 2022, 17:52.
                  merely at clientco for the entertainment

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                    #19
                    Just starting to sink in now eek, wow, that is a death knell to the world of clients looking to pay a daily rate, hire for niche roles all over the UK, and do so inside IR35 while expecting the contractor to foot the bill for "two to three days a week in the office". I will have to head to the perm job boards for the first time in a long time.

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