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Office Hours: 9am to 5.30pm

“Site based exemption” schemes

We’ve been hearing from some of our agency clients that they are being approached by a couple of umbrella companies advising them that from 6th April, it will be business as usual as they have a “site based exemption”.

We’ve been hearing from some of our agency clients that they are being approached by a couple of umbrella companies advising them that from 6th April, it will be business as usual as they have a “site based exemption”.

The grass is not greener on the other side

As you can imagine, for agencies and contractors this would sound great as it would mean that the contractors can continue to claim tax relief on their expenses at source and agencies would not see any disruption in the supply chain.

But beware……

There are no site based exemptions.

I’ll say that again, there are no site based exemptions. The reason we know this? It is because we are active members of two trade organisations (see links below) that are lobbying for site based exemptions to be considered by HMRC as a way of allowing certain workers to continue to benefit from tax relief at source if they are working on client sites for tasks of limited duration. As yet, we have had no indication that these kind of exemptions will be given or are even being considered.

So what are these companies doing?

Well, basically they are lying to their clients and effectively exposing themselves to huge risks in the future. We can only assume that they are planning on taking a risk that such exemptions might be passed come April 2016 and if they are not they will simply hope that they are not spotted by HMRC.

What is the risk?

One would hope that a provider would not take the risk of allowing expenses to be paid when they could face personal liabilities being placed on the directors if they are investigated. However we have seen plenty of schemes in the past that have been briefly popular only to be closed down.

In the past, companies promoting these kind of schemes would simply close down with no liability borne by the directors/owners. Under new regulations to counter avoidance, should a scheme be investigated and found to be non compliant, a PLN (Personal Liability Notice) could land on the doormat of the owners.

Whilst there is no risk to the agency financially, there are reputational aspects to be considered in promoting a scheme to their contractors that proves to be a lemon.

So what should agencies do?

The first thing to do is make sure they are not taken in. Research and check what is being offered by a provider. If it sounds too good to be true it probably is.

Then, speak to us and we will show the way through the fog of legislation.

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