Travel Expenses of Workers Providing Services Through Intermediaries

The rules on Travel & Subsistence costs for employees are amended where a worker is engaged through an employment intermediary for 2016/17 onwards.

The new rules apply where an individual (‘the worker’) personally provides services which are not excluded services to another person (‘the client’) and the services are not under a contract directly between the clients or a person connected with the client and the worker but under arrangements involving an employment companies.

These rules do not apply if it is shown that the manner in which the worker provides the services is not subject to, or to the right of, supervision, direction or control by any person.

Where the contract is within the scope of the intermediaries legislation (known as IR35), this section will only apply to those contracts which fall within IR35 or world do so if the individual’s remuneration was not being taken as employment income.  Where such a contract is caught, the above exemption does not apply. New s339A ITEPA2003

Where the new rules apply, each engagement is treated as a separate employment for the purposes of the travel and subsistence rules.

In determining whether these rules apply, no regard is to be given to any arrangements the main purpose, or one of the main purposes, of which is to secure they do not apply to any extent

Broadly, where a client or another relevant person provides a fraudulent document intended to mislead the employment intermediary into thinking that the above rules do not apply and, as a result, tax relief for travel and subsistence is deducted incorrectly, the party who provides the fraudulent document will be liable for the tax which was not deducted.

HMRC are given powers to make provision for, or in connection with, the recovery from a director or office of a company of a debt owed as a result of the above rules. (New 688B ITEPA 2003)

Where the rules on fraudulent documents apply, HMRC may serve a personal liability notice on the relevant director for the unpaid tax involved.  Such notices are subject to various rules including the right of appeal. (new chapter 3B part 4 income Tax (pay as you earn) regulations 2003)

‘It is estimated that the measure will affect around 430,000 individuals employed by umbrella companies and employment agencies over the course of a year’ – Overview of the legislation in draft 09.12.15





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