Following the Chancellor’s Budget 2015 announcement that the government “will stop employment intermediaries exploiting the tax system to reduce their own costs by clamping down on the agencies and umbrella companies who abuse tax reliefs on travel and subsistence – while we protect those genuinely self-employed”, HMRC has now provided further detail.
The proposal is to restrict tax relief for travel and subsistence for workers engaged through an employment intermediary, such as an umbrella company or a personal service company, where that worker is under the supervision, direction or control of a third party. Those who have followed the changes to the agencies tax legislation will note the familiarity of the test as that legislation does not apply where the manner in which the services are provided are not subject to (or to the right of) the supervision, direction or control of a third party.
Any changes will take place after a full and formal consultation, anticipated in the early summer of 2015, and would be intended to take effect from 6 April 2016 and legislated for in a future Finance Bill.
As many clients and candidates alike will know, use of such schemes is heavily frowned upon by Sedex who mark the end user down on their Ethical audits, whilst the GLA have been know to revoke licences for such practice leaving labour providers unable to supply into the Food sector.
Contact Patrick Ramsdale on 0161 746 8811 to discuss in more detail how this affects our sector