• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!

Worrying HMRC statement - End of Umbrella?

Collapse
X
  •  
  • Filter
  • Time
  • Show
Clear All
new posts

    Worrying HMRC statement - End of Umbrella?

    Just came across this on HMRC website....HM Revenue & Customs: Statement by HM Revenue & Customs

    From what I can make out, its saying expenses can no longer get tax relief even under dispensation unless they are actually reimbursed to employee?

    doesnt have a date on statement, so not sure how old this is, but bit worrying....

    anyone out there (umbrella company reps) know any better?

    #2
    Originally posted by YNWA View Post
    Just came across this on HMRC website....HM Revenue & Customs: Statement by HM Revenue & Customs

    From what I can make out, its saying expenses can no longer get tax relief even under dispensation unless they are actually reimbursed to employee?

    doesnt have a date on statement, so not sure how old this is, but bit worrying....

    anyone out there (umbrella company reps) know any better?

    Checking back on the HMRC news pages it was issued yesterday.

    IANAA but from what I understand from that notice no, thats not what they are saying.

    This is aimed at umbrellas and other companies operating or intending to operate the pay day by pay day relief model.

    As it says, what they do, or propose to do, is calculate your pay and expenses on a monthly basis. Your expenses are then set against your pay to reduce your tax liability. According to HMRC this is wrong (and as far as I can see they are right).

    In doing this the brolly's are blurring the line between pay and expenses and trying to put expenses payments through as part of the payroll.

    What they should do is calculate your pay, deduct tax and NI and then pay you your net salary and reimburse your expenses seperately.

    All expenses are then declared on your P11d at the end of the year where appropriate and any tax over/under payment is calculated at that point.

    Doing it this way means the Umbrella doesnt have to submit a P11d (becasue they claim that no expenses were reimbursed it was all done as part of the payroll with tax paid) for you or keep track of your expenses in order to do so, which saves them money.

    None of this changes the fact that you can only claim legitimate expenses that are incurred wholly and solely as a result of your work or business activities, dispensation or otherwise, and it is your responsibility to prove that this was the case should HMRC ever decided to investiagte your tax returns.

    It certainly wont mean the end of umbrella companies, although those that operate some of the more 'creative' expenses schemes may be affected by it.
    Last edited by DaveB; 12 July 2011, 12:54.
    "Being nice costs nothing and sometimes gets you extra bacon" - Pondlife.

    Comment


      #3
      DaveB is quite correct - couldn't have put it better.

      Comment

      Working...
      X