HMRC have recently released Business Brief (50/09) announcing that they will be clamping down on expenses dispensations. Expenses benefits schemes are commonly used by umbrella companies or employment businesses to legitimately allow a worker to claim travel and subsistence whilst on assignment. However, it is feared such schemes are being abused.
HMRC have indicated that they are currently investigating, and will be continuing to investigate, employment businesses and umbrella companies that are not compliant in these areas.
Generally, only agencies that employ their workers on overarching employment contracts can allow expenses as gross paid to their agency workers. To prevent any investigation of your business, you should ensure that your employment contract is properly overarching and that all your processes in relation to expenses are compliant.
Employment contracts appear to slowly be becoming more attractive for agencies to use with agency workers. There are a number of reasons for this including the opportunity to pay expenses gross in appropriate circumstances. However this option is included within HMRC’s current scrutiny. For more information, advice on the pros and cons of using an employment contract, an assessment of your practices, and so called “overarching contracts” CALL US ON 01273 236236.
Can you be liable for Umbrella companies failing to comply on expenses?
Usually not. However a non compliant umbrella could leave you exposed to risk under the Managed Service Company legislation, and also could damage your reputation in other circumstances where you have recommended the worker to the umbrella. See the free SPA Scheme on Lawspeed’s website, to reduce that risk or CALL US on 01273 236236.