As you are probably now aware (as we have already written about this at length), the Government are pressing on with their intention to restrict tax relief on travel and subsistence expenses for temporary workers.
This will affect thousands of contractors in the UK, who after 6th April 2016 will not be able to claim this relief, even if they have travelled hundreds of miles and paid accommodation expenses in order to provide a valuable service.
We know that despite HMRC’s opinion to the contrary, the proposed test of eligibility to continue to claim is not fit for purpose. They have advised that should a contractor be subject to Supervision, Direction and Control (or their client has the right to SDC) then they should be treated as a normal employee and lose this valuable benefit. HMRC believe that their test will be very narrow and only affect a small proportion of the workforce.
However, now we have had a chance to read over the scant guidance available, it is our opinion and the opinion of our industry colleagues and competitors that it will effectively strip every worker who is working via an intermediary of the right to claim relief.
Clearly this is not fair. Many contractors provide specific services to clients for periods of limited duration and are often expected to travel long distances to their place of work to provide these services.
Ironically, if the legislation is pushed through as it is now, permanent employees of a client’s company WILL be allowed to claim relief if they are working on a temporary worksite whereas agency supplied workers will not!
So much for fairness.
An alternative approach
As an industry, we are pushing for the SDC legislation to be changed to exempt these “site based” workers from the restrictions. This we believe is the original intention of the legislation, and there are thousands of true contractors who will be seen as collateral damage.
It is our understanding that there is already legislation in place on the Statute Books that would allow this exemption to be put in place and we need to make sure that our contractors’ voices are heard.
The e-petition below has been launched by a fellow member of All Umbrella Companies Are Equal (AUCAE – a leading trade body representing the interests of umbrella and accountant companies and their contractors) and we would encourage you to add your name to it.
If you would like to know more about AUCAE or if you would like to read the drat legislation then please check out this links below.
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Along with over 13 years experience in the contractor payroll industry, and after spending most of his working life as a financial advisor in the regulated financial services industry, Mike has garnered an extensive network of contacts in the recruitment industry, many of whom trust both him and the One Click Group to handle their accounting. Mike has also been a member of various industry bodies throughout the years, such as the British Institute of Recruiters, in order to champion best practices across the contractor payroll industry.