Umbrella Dilemma

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Can an umbrella contractor find someone to process their expenses in light of the new legislation on travel and subsistence (T&S) expenses tax relief?

Yesterday the Freelancer and Contractor Service Association (FCSA) held a compliance seminar to give umbrella providers, accountants and relevant contracting stakeholders an opportunity to address the newly implemented changes to T&S (along with proposed public sector IR35 reforms).

Thus far HMRC has failed to offer sufficient guidelines to help determine whether a contractor is under supervision, direction or control (SDC), which if they are they will not be able to obtain tax relief on their T&S expenses.

The main topic mused upon by attendees was whether umbrella companies would still find it commercially viable to process a contractors’ expenses, what with the burden of proving SDC isn’t present now falling to them.

With hazy guidelines relating to what actually constitutes the evidence needed to show there is not SDC it is unclear that umbrellas will want to take on the risk that will result if they incorrectly process the expenses.

It has been speculated that in their enthusiasm to target non-compliant individuals the HMRC has lost sight of how legislation might impact those who are already adhering to the rules.  Indeed the broad ‘mosaic’ approach suggested by HMRC essentially looks to be a too complicated and time consuming way to gauge contractors SDC status to allow it to be worthwhile for umbrellas.

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