The Finance Bill 2015 finally received Royal Assent last Thursday 15th September, bringing into law the restrictions on tax reliefs for travel and subsistence expenses (in effect since April 2016), and the Apprenticeship Levy, amongst other things.
The Act is based on George Osborne’s (final) budget, and the long delay can be put down to the drawn out, yet democratic process, whereby Parliament checks and challenges the Government’s legislation. Equally, one could point to the fact that often errors in drafting must be addressed before the Bill becomes law.
Indeed, in respect of the tax relief on expenses, it was widely publicised earlier this year that an error in drafting subjected all workers to the same test (no relief on expenses unless it can be shown that the manner in which the worker provides the services is not subject to, (or to the right of), supervision, direction or control by a third party).
This is despite the Government’s statement at the time that an exception was intended to apply to PSC contractors whose project was found to be outside the scope of IR35.
Ben Grover, Senior Legal Consultant at Lawspeed, commented: “Finance Acts and tax legislation are notoriously complex, not least because they often simply amend parts of existing legislation. As a result, anyone who wants to establish what the legal position is, with any certainty, must wade through a labyrinth of historical law. As HMRC increasingly pushes liability for tax onto recruiters and others in the contractual chain, it is vital that employment businesses, umbrella companies and other service providers understand where their liability lies and what steps can be taken to mitigate against this.”
Lawspeed can advise on aspects of recruitment law and tax relevant to the sector. For clarification of your liability please give us a call on 01273 236 236. ARC members can access this advice on the ARC helpline 01273 777 997.