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?
- Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
- Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
Umbrella Companies that process expenses properly
Collapse
X
-
-
Originally posted by breaktwister View PostWhat 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?
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 entertainmentComment
-
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?Comment
-
Originally posted by breaktwister View PostWho 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?
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 entertainmentComment
-
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.Comment
-
Originally posted by breaktwister View PostThanks 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.
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 entertainmentComment
-
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.Comment
-
Originally posted by breaktwister View PostThe 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".
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 entertainmentComment
-
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.Comment
- Home
- News & Features
- First Timers
- IR35 / S660 / BN66
- Employee Benefit Trusts
- Agency Workers Regulations
- MSC Legislation
- Limited Companies
- Dividends
- Umbrella Company
- VAT / Flat Rate VAT
- Job News & Guides
- Money News & Guides
- Guide to Contracts
- Successful Contracting
- Contracting Overseas
- Contractor Calculators
- MVL
- Contractor Expenses
Advertisers
Contractor Services
CUK News
- Streamline Your Retirement with iSIPP: A Solution for Contractor Pensions Sep 1 09:13
- Making the most of pension lump sums: overview for contractors Sep 1 08:36
- Umbrella company tribunal cases are opening up; are your wages subject to unlawful deductions, too? Aug 31 08:38
- Contractors, relabelling 'labour' as 'services' to appear 'fully contracted out' won't dupe IR35 inspectors Aug 31 08:30
- How often does HMRC check tax returns? Aug 30 08:27
- Work-life balance as an IT contractor: 5 top tips from a tech recruiter Aug 30 08:20
- Autumn Statement 2023 tipped to prioritise mental health, in a boost for UK workplaces Aug 29 08:33
- Final reminder for contractors to respond to the umbrella consultation (closing today) Aug 29 08:09
- Top 5 most in demand cyber security contract roles Aug 25 08:38
- Changes to the right to request flexible working are incoming, but how will contractors be affected? Aug 24 08:25
Comment