Payquest News
HMRC announce their intentions regarding umbrella companies
Ex HM Inspector of Taxes Bob Jones comments regarding the latest move by HMRC concerning the activities of umbrella companies and how they interpret current taxation laws concerning contractors.
This was posted on to the HMRC website on Friday. HMRC brief.
Bob Jones has written many authoritative articles in the past regarding dispensations and over arching contracts. Last year HMRC published a consultation document regarding umbrellas.
"I was convinced that HMRC were going to introduce legislation to make umbrellas, at best, a less viable alternative. My response to HMRC was that some of the problems with umbrellas were of HMRC's own making because of, amongst other things, a lack of staff awareness and failure to use existing powers."
HMRC's main areas of concern with umbrella companies remains fairly unchanged since the early part of this decade and is centered around:
- Overarching employment contracts
- National Minimum Wage
- Dispensations
- Poor processess
- Allowing expenses where no expense has been incurred
In the end HMRC announced their intention to use their existing powers and the link above is the end result of that decision.
Jones continues: "There are some umbrellas operating...
- without robust overarching contracts
- without adequate checks that expenses have been incurred
- without adequate audit trails where expenses have been incurred
- using salary sacrifice to pay below the minimum wage.
Those responsible umbrellas who comply with all their legal obligations simply cannot compete with those who do not."
Compliant umbrellas will welcome this approach by HMRC. Non compliant umbrellas will be expected to make good all tax, NIC together with interest plus all conceivable penalties that HMRC can charge.
Bob Jones took early retirement in 2006. Latterly he managed one of the enquiry teams that examined travel expense claims and is a veteran of over 100 Commissioners meetings. Since his retirement has worked on a number of projects in order to arrive at a compliant solution for umbrellas.