If you woke up after the budget slightly confused and unsure of what to do next……….don’t worry, you are not alone.
After much debate, intense speculation and almost unprecedented lobbying activity from the “Umbrella” community, The Chancellor has now delivered his pre-election budget – designed no doubt to appeal to the widest group of voters as possible. Headlined by the usual “Daily Mail” vote grabbing measures (such as 2p off a bottle of whiskey, 1p off a pint of beer, yet another freeze on Fuel Duty etc.) the Chancellor did manage to also include his much heralded attack on what he describes as an unfair tax advantage afforded to Umbrella workers by use of an overarching contract of employment.
By way of a pre-curser (and perhaps a recognition to the fact that any anti-avoidance action in this area is likely to cause widespread panic and possible damage to UK plc), HMRC published a “discussion” document on December 16th 2014 inviting comment from within the industry. Anderson took a pro-active position within the collaborative response organised by FCSA and masterminded by EY. As it transpires, HMRC’s somewhat jaundiced view of the typical umbrella worker was laid bare when statistical evidence gathered from 36 of the largest and most influential umbrella companies (who collectively represented close to 100,000 umbrella workers or some 25% of the total UK umbrella workforce) was presented as part of our response. With an average pay rate close to £15 per hour and an average weekly mileage to assignment of nearly double the UK average, HMRC had no choice but to accept that a vast number of umbrella workers were not the stereotypical very low paid (NMW) and abused temporary workforce that they believed them to be.
That said, cracking down on “tax abuse” is a vote winner and so having dealt their hand back in December, HMRC obviously felt obliged to raise the bidding by continuing with their policy to restrict T&S expense claims from Umbrella (and PSC) workers who have the same “look and feel” as agency workers. Notably, those umbrella (and PSC) workers that are not under the “direction, supervision AND control” of the client will be exempted from such restrictions.
It would be foolhardy to second guess the effect on our industry from this announcement or to take any action at this time. The Government have announced a formal “Consultation” on this matter with any legislation delayed until April 2016 (at the earliest) and only if the next Government has the same appetite to legislate in this area. But the writing is clearly on the wall and it is comforting to know that Anderson Group intends to continue its prominent and pro-active stance in helping to minimise as far as possible the impact of any likely legislation. Whatever the outcome of this formal consultation, the industry will have ample opportunity to prepare for change and implement (with our assistance) with as little damage as possible. The one thing we know for sure is that intermediaries will still exist after April 2016, albeit perhaps in a slightly different form with Anderson at the forefront of innovation. So please don’t have sleepless nights, you can relax and we’ll take care of your business.