Major Victory for Umbrella Companies in Pre Budget Report

Alistair Darling delivered the Treasury's Pre Budget Report (PBR) on Monday the 24th of November. It was announced that HMRC had reversed its position on removing tax relief on legitimate travel expenses for temporary workers and contractors in overarching employment contracts. This followed submissions from interest groups led by, amongst others, the Association of Employment Management Companies (AEMC) of which planIT Solutions is a founding member. The decision was accompanied by a welcome caveat that HMRC would focus its energies on better policing compliance within the industry.  This was a major victory for planIT and other compliant operators who share a strong desire to see a level playing field in this market. The PBR stated:

Following the consultation Tax relief for travel expenses: temporary workers and overarching employment contracts, the Government has decided to leave the current rules unchanged. However, in the light of evidence from the consultation confirming poor levels of compliance in this area HMRC will refocus its efforts to ensure that the current regime is properly applied. If compliance does not improve, the Government may return to this at a later date.

Some rogue umbrella providers continue to splash expenses for which receipts are not required across their websites and blatantly encourage contractors to claim expenses they don't actually incur.  It's likely that such operations will become the subject of intense scrutiny by HMRC. While this will have no direct effect on planIT's clients, you may know other contractors who are working through these kinds of unscrupulous umbrella companies. It will be in their long term interest to move to compliant solutions such as those offered by planIT as quickly as possible.