Business as usual
We’ve now had a few days to digest the information contained in Wednesday’s release of the draft legislation covering the treatment of travel and subsistence expenses for contractors. To paraphrase Mark Twain – “reports of the death of umbrella companies have been greatly exaggerated”.
Along with many of our industry colleagues, the One Click Group have campaigned for greater compliance in the umbrella industry and we think that the new legislation will go a long way towards making this a reality.
We have always operated a compliant umbrella service and we have never exploited loopholes or creative tax planning vehicles and this stands us in good stead for the future. We engage closely with our clients to add value to the relationships with have with them and we see this as being increasingly important in the future.
Since the announcement on Wednesday, we have had meetings with a number of recruitment agencies and the responses we have received to the T&S legislation has been mixed. Some agencies are fully aware of what is happening and some have no idea of what impact the changes may have on their business.
One of the key things that has come from these meetings is that agencies will still require the services of intermediaries post April 2016 and there will therefore be a greater demand for closer relationships between agencies and intermediaries. This will be required to ensure that the supply chain is managed in the most compliant and efficient manner.
We were hoping that we would hear more about the planned review of IR35, however this looks unlikely before next year. What we do expect to receive (and indeed NEED to receive) is clarification of how Supervision, Direction and Control (SDC) will be interpreted as this is key to the treatment of travel and subsistence expenses for contractors using either umbrella companies or their own Limited Companies.
We also need guidance from Government on how the new legislation will be policed in practice. It’s all very well saying that changes are being made if the mechanism by which the changes are monitored and enforced is not up to the job.
Keep calm and carry on
Whilst the changes announced in the Autumn Statement are a positive in terms of compliance in the industry, we still believe that if they are enacted in April in their current form, there will be a huge financial impact for UK PLC. We hope that continued lobbying from groups like All Umbrella Companies Are Equal and other trade bodies will persuade Government to amend the legislation to minimse the effect.
In the meantime, keep calm, carry on, and most importantly, talk to your providers so you can be assured they will be able to give you the best possible advice.
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