Contractors’ agencies in a spin

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Contractors are not alone in being concerned about travel and subsistence expenses, despite the ‘SDC’ rules governing eligibility being almost two months’ old.  Recruitment agencies have reportedly been at a loss regarding liability and what to do since new rules took effect on April 6th.  They are unsure about what actions to take to avoid getting caught by the new rules.

One issue relates to the fact that agents are being told there is “no reason” not to help contractors obtain evidence from the end-hirer about whether the contractor is under Supervision, Direction or Control (SDC).

Issues this raises include that if an agency asks a hirer to give a statement they can be drawn into a tax avoidance proposition and be caught up in a tax investigation.  This could be the case whether or not the statement is correct.  If it is not HMRC may go after the hirer, inevitably resulting in affecting the agency’s relationship with the hirer.

There are doubts about whether an end-hirer’s staff will be able to compose something that goes beyond the simplistic waivers and generic statements the HMRC has said it will NOT accept as satisfactory evidence to demonstrate an absence of SDC.   Who at the hirer can really prove there is no SDC, indeed who actually understands the test sufficiently.

It seems that this is something the government need to sort out in due course.  Already people are suggesting the redrafting of contracts to rule out the possibility of there being a right to SDC, such actions however are not advised, being labelled ‘dangerous’ by legal recruitment firms.

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