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The Government changed the travel and subsistence expense rules for agency and Umbrella workers effective from 6th April 2016.
The changes restrict a worker's ability to get tax relief on his/her travel and subsistence costs unless it can be shown that the worker is not under the supervision, direction or control (SDC) of either the client, agency or PayStream in the way he/she carries out their work.
HMRC assumes that all agency and Umbrella workers are subject to SDC unless the agency or Umbrella company has gathered evidence to the contrary. Those working through personal service companies (PSCs) are not affected by these rules provided they fall outside IR35.
HMRC says Supervision is someone overseeing a person doing work, to ensure that person is doing the work they are required to do and it is being done correctly to the required standard. Supervision can also involve helping the person, where appropriate, in order to develop their skills and knowledge.
PayStream note: a client checking, at the end of a job, that it has been carried out properly will not, on its own, amount to supervision.
HMRC says Direction is someone making a person do his/her work in a certain way by providing them with instructions, guidance or advice as to how the work must be done. Someone providing direction will often coordinate how the work is done, as it is being undertaken.
PayStream note: if you have an expertise that the client does not it is unlikely that the client will be able to direct you as to how to do your job.
HMRC says Control is someone dictating what work a person does and how they go about doing that work. Control also includes someone having the power to move the person from one job to another.
PayStream note: if you are filling in for a full time employee who is sick or on leave it is likely that you will be subject to SDC.
SDC over where the work is done, what is to be done and when it is to be done does not necessarily mean you will be caught by the legislation; what is important is whether there is SDC over HOW the work is done. Click here for the latest HMRC guidance on the meaning of SDC and how to form a view if the SDC test is met. As you will see, the ‘SDC’ test is a very difficult test to pass. Given the wide scope of what could be considered to be ‘SDC’, the vast majority of contractors will be considered by HMRC to be under some element of supervision, direction or control to some extent and it will be rare to be able to state categorically that there is no element of SDC at all within the contractual chain. For an umbrella company to process regular expenses in relation to a main site therefore is a risk, not only to the umbrella and other parties in the supply chain, but also to you as the contractor, who may find that later down the line HMRC do not agree that such expenses were ever allowable.
To ensure that we remain compliant and safeguard you from any potential liabilities down the line, PayStream work with the following two umbrella company models:
This model provides the benefits of continuous employment, access to statutory benefits, comprehensive insurance cover, advances and more! Although travel and subsistence expenses are not permitted to a main place of work, other allowable expenses (such as claims in relation to adhoc journies to and from a temporary workplace) may be claimed via PayStream or through a P87.
This model is suitable if you visit multiple temporary workplaces during the course of an assignment. Mileage can be relieved in relation to adhoc journies between temporary workplaces in line with HMRC approved mileage rates. This is because special rules apply to workers whose job it is to move regularly from place to place. Workers that may fall into this category include:
These workers may still be able to claim their inter-site travel costs even if they are subject to SDC. This is because part of their job requires moving from place to place rather than simply travelling on a regular basis to one or two workplaces to do their job.
If you believe you are a mobile worker, then please let us know. Our questionnaire can help determine whether you are eligible to claim expenses in relation to your inter-site travel.
Under the Mobile model, other allowable expenses captured on our mobile app or in our portal can also be claimed either via PayStream where reimbursed, via a P87 (under £2,500) or by completing a Self-Assessment return.
To determine if SDC applies, HMRC will look at: