Umbrella Expenses

[Rialto99]

two questions for all you clever people - probably been asked before but no harm in asking again!

Umbrella Companies - they get you to sign an 'overarching' employment contract and then you perform separate 'assignments' under this overarching contract. You perform these 'assignments' at a 'temporary workplace' which therefore entitles you to claim expenses (mileage & travel to / from the temporary workplace etc) and thus reduce your tax bill.

Question one: if the clients site (for each assignment) is the temporary workplace, where the h3ll is my permanent workplace? I am based in Bristol and my Umbrella is based in London (registered office) so surely my permanent workplace cannot be London? Is it my home office in Bristol?

Question Two: going back to the overarching contract, what would happen if I only perform one assignment within the overarching contract and then go back to permanent work? Would that mean that the client's site (usually classed as the temporary workplace) becomes my permanent workplace and therefore I should pay back the tax I have saved by claiming expenses?

Please help, a few of us here would like to know...

Cheers
R

[ASB]

two questions for all you clever people - probably been asked before but no harm in asking again!

Umbrella Companies - they get you to sign an 'overarching' employment contract and then you perform separate 'assignments' under this overarching contract. You perform these 'assignments' at a 'temporary workplace' which therefore entitles you to claim expenses (mileage & travel to / from the temporary workplace etc) and thus reduce your tax bill.

Question one: if the clients site (for each assignment) is the temporary workplace, where the h3ll is my permanent workplace? I am based in Bristol and my Umbrella is based in London (registered office) so surely my permanent workplace cannot be London? Is it my home office in Bristol?

Question Two: going back to the overarching contract, what would happen if I only perform one assignment within the overarching contract and then go back to permanent work? Would that mean that the client's site (usually classed as the temporary workplace) becomes my permanent workplace and therefore I should pay back the tax I have saved by claiming expenses?

Please help, a few of us here would like to know...

Cheers
R

Q1: A better question might be "do I have a permanent workplace". a subsiduary might be "Do I have more than one permanent workplace". HMRC give quite a lot of guidance in this area. Make of it what you will with regard to your circumstances.

[NotAllThere]

Question 2: Yes. It also applies if you use a different brolly for each assignment. Each one will be permanent. There is some wriggle room if you expect to have more than one work place.

[Bluebird]

two questions for all you clever people - probably been asked before but no harm in asking again!

Umbrella Companies - they get you to sign an 'overarching' employment contract and then you perform separate 'assignments' under this overarching contract. You perform these 'assignments' at a 'temporary workplace' which therefore entitles you to claim expenses (mileage & travel to / from the temporary workplace etc) and thus reduce your tax bill.

Question one: if the clients site (for each assignment) is the temporary workplace, where the h3ll is my permanent workplace? I am based in Bristol and my Umbrella is based in London (registered office) so surely my permanent workplace cannot be London? Is it my home office in Bristol?

Question Two: going back to the overarching contract, what would happen if I only perform one assignment within the overarching contract and then go back to permanent work? Would that mean that the client's site (usually classed as the temporary workplace) becomes my permanent workplace and therefore I should pay back the tax I have saved by claiming expenses?

Please help, a few of us here would like to know...

Cheers
R

q1 - you don't have a perm workplace - unless you stay at a client site for 24+ months.

q2 - if you go permie, then you won't be able to clain expenses any more, however anything you'd claimed previously would be ok - providing you weren't at a client site for more than 24 months whilst on contract.

[Rialto99]

q1 - you don't have a perm workplace - unless you stay at a client site for 24+ months.

q2 - if you go permie, then you won't be able to clain expenses any more, however anything you'd claimed previously would be ok - providing you weren't at a client site for more than 24 months whilst on contract.

Cheers guys - most helpful although I’m still unsure as to what is the definitive answer. Any chance we could have some input from ContractorUmbrella Lisa or another Umbrella Company?

I've phoned a few last Friday with VERY conflicting advice .

Thanks again, R

[Rialto99]

Cheers guys - most helpful although I’m still unsure as to what is the definitive answer. Any chance we could have some input from ContractorUmbrella Lisa or another Umbrella Company?

I've phoned a few last Friday with VERY conflicting advice .

Thanks again, R

I've also just found this on the Danbro website:-

"If you only work on a single assignment, without the anticipation that there will be further assignments, your workplace will be regarded as permanent for these expense types and they will not be allowable against tax".

So at the start of my first contract, as long as there is "the anticipation that there will be further assignments" I will be able to offset the expenses mentioned even if I do eventually go back to a Permie job after only one assignment?

I wish this was b1oody simple?!

R

[malvolio]

I've also just found this on the Danbro website:-

"If you only work on a single assignment, without the anticipation that there will be further assignments, your workplace will be regarded as permanent for these expense types and they will not be allowable against tax".

So at the start of my first contract, as long as there is "the anticipation that there will be further assignments" I will be able to offset the expenses mentioned even if I do eventually go back to a Permie job after only one assignment?

I wish this was b1oody simple?!

R

It is simple. Use your own company. You then have your own workplace.

Meanwhile the rules are whatever the umbrella says they are, since you are in effect their employee. HMRC are trying to make the travel expenses thing stop for brollies, which is why you get conflicting views on what is and isn't possible. AIUI the actual rules say that if working through a brolly, your workplace is wherever you are working at the time, hence no travel. The logic is that you don't work at their premises and you don't have any other legal workplace, so where your desk is is it.

And as has been said many time, you can claim whatever expenses you like. It's whether or not you should pay tax on them as earned income is the real question.

[Rialto99]

It is simple. Use your own company. You then have your own workplace.

Meanwhile the rules are whatever the umbrella says they are, since you are in effect their employee. HMRC are trying to make the travel expenses thing stop for brollies, which is why you get conflicting views on what is and isn't possible. AIUI the actual rules say that if working through a brolly, your workplace is wherever you are working at the time, hence no travel. The logic is that you don't work at their premises and you don't have any other legal workplace, so where your desk is is it.

And as has been said many time, you can claim whatever expenses you like. It's whether or not you should pay tax on them as earned income is the real question.

Thanks Mal - I appreciate your advice. With all this in mind then, 1. how can Umbrellas justify processing contractor expenses (mileage to / from the temp / perm workplace) and therefore reduce your tax bill if these expenses are indeed not allowable?, surely Umbrellas would all go out of business if contractors couldn't legally offset their tax bill in this way...

2. Who has to pay back the tax saved (by claiming such expenses) if / when HMRC audit the Umbrella?

Thinking about it logically, surely over the last (say) 7 years HMRC have indeed audited several Umbrella Companies (maybe 100's) and not pulled them up on this generic 'incorrect' treatment of the expenses legislation. Otherwise how on earth can a company such as Parasol (1,000s of contractors) continue to process and offset expenses to reduce contractor's tax bills?

R

[TheFaQQer]

The tax bill is yours to pay, no-one else.

So, if the umbrella allows you to claim expenses where you should be paying tax on it, it's your fault, not theirs.

[malvolio]

The tax bill is yours to pay, no-one else.

So, if the umbrella allows you to claim expenses where you should be paying tax on it, it's your fault, not theirs.

Precisely. The umbrella's tax affairs will be completely in order. However in recent months a certain umbrella sank like a stone because it couldn't pay it's VAT bill.

They are a convenience and take away a lot of the work (not that there's that much involved) but ultimately it's your money and you get to pay the fines.