HMRC issued a tax bulletin yesterday which included a further “warning” for expense led Contractor solutions. Specifically it stated,
“Following responses to the July 2008 consultation ‘Tax relief for travel expenses: temporary workers and overarching employment contracts’, HMRC commenced compliance activity to identify and take action against those Employment Businesses and umbrella companies which are operating in contravention of tax, National Insurance or national minimum wage legislation.”
In the bulletin, HMRC state to have identified the following issues:
“Current compliance activity has identified a number of concerns that are the subject of more detailed, ongoing investigation. These include:
- Potentially ineffective overarching employment contracts
- Dispensations which are invalid, or which have been wrongly applied
- Not complying with the terms of the dispensation
- “Expense payments” made tax-free without that level of expense, or in many cases any expense, having been incurred
- Potential illegal deductions from workers’ pay
- Ineffective and sometimes unlawful management processes; and
- Breaches of national minimum wage”
Once again it would seem that some providers are taking short cuts with Contractors livelihoods and damaging the effectiveness of the flexible workforce as HMRC/HMT will simply continue to legislate. This is obvious to me when the bulletin goes on to state;
“End user businesses which use temporary workers paid though Employment Businesses and/or umbrella companies which do not fully comply with their statutory obligations, clearly run a risk of damage to their reputation and their business if HMRC takes action.”
I would reiterate my previous comments that if it looks too good to be true then it probably is and in 2009 it is simply not possible to do the right thing by only charging a really low fee and promising expense led high percentage returns. HMRC will clamp down on those organisations and will also look at a Contractors expenses… buyer be aware.
HMRC Bulletin Link
by Rob Crossland
Contractor expenses get another view by HMRC
August 7, 2009 in Business Expenses, Contractor News, Industry comment, Tax
HMRC issued a tax bulletin yesterday which included a further “warning” for expense led Contractor solutions. Specifically it stated,
“Following responses to the July 2008 consultation ‘Tax relief for travel expenses: temporary workers and overarching employment contracts’, HMRC commenced compliance activity to identify and take action against those Employment Businesses and umbrella companies which are operating in contravention of tax, National Insurance or national minimum wage legislation.”
In the bulletin, HMRC state to have identified the following issues:
“Current compliance activity has identified a number of concerns that are the subject of more detailed, ongoing investigation. These include:
Once again it would seem that some providers are taking short cuts with Contractors livelihoods and damaging the effectiveness of the flexible workforce as HMRC/HMT will simply continue to legislate. This is obvious to me when the bulletin goes on to state;
“End user businesses which use temporary workers paid though Employment Businesses and/or umbrella companies which do not fully comply with their statutory obligations, clearly run a risk of damage to their reputation and their business if HMRC takes action.”
I would reiterate my previous comments that if it looks too good to be true then it probably is and in 2009 it is simply not possible to do the right thing by only charging a really low fee and promising expense led high percentage returns. HMRC will clamp down on those organisations and will also look at a Contractors expenses… buyer be aware.
HMRC Bulletin Link
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