Individuals who use umbrella companies to shelter from tax may need to swiftly review their arrangements or face punitive consequences, in light of the recent consultation into employment intermediaries and tax relief for travel and subsistence, says Jaimie Kaffash
The government is targeting employment intermediaries for their use of tax benefits designed for self-employed individuals. It wants to tackle at times unscrupulous activities, with intermediaries using innovative methods to avoid PAYE and Class 1 national insurance contributions (NICs) obligations.
But it also wants to plug an area that is seeing lots of tax revenue being lost – through employment intermediary workers claiming tax free travel and subsistence while fellow workers, engaged in the same or very similiar work, have no access to such benefits.
The view of tax advisers is that employment intermediaries, and specifically ‘umbrella companies’, have enjoyed these advantages for a long time and their proliferation in recent years has subsequently cost the Exchequer substantial tax revenue.
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