For non-accountancy minded people, new ideas, policies and discussions involving HMRC come with a common problem: no matter how important, it’s hard to get through the reading material without falling asleep.
Take, for example, the upcoming ‘Tax Relief for Travel and Subsistence Consultation’, due on September 30th. The chances are that, as a freelancer or contractor, you had no idea it was taking place. And yet it could have a very serious impact on how you operate as a small business.
So what’s the deal with this? Should we be attending the consultation ourselves? Is anything expected of us? We spoke to Mr Ever-Reliable, Kenny Fitzgerald, our go-to man over at on-demand accountancy firm, My Accountant Friend. Here’s what he had to say.
So, this travel and subsistence consultation… what’s that all about, Kenny? Who is being consulted? Should we expect a call?
Well, the first thing to note is that this doesn’t affect everyone working for themselves. The government have said that they’re interested in clamping down on what they view as disguised employees who work ‘under the supervision, direction or control of any person’, among other things – which many have taken to mean people who work through umbrella schemes, although it’s obviously not that straightforward.
When is it ever?
Well, quite. Put as simply as possible, HMRC wants to stop people having tax-free travel and subsistence if they work through an ‘employment intermediary’ whose business is mainly supplying labour to other companies, they are under the ‘supervision, direction or control’ of someone else, and they’re doing their work within the UK. All three of those conditions have to apply for this to affect you, or so the proposal goes.
So, let us get this straight. If you’re working through an employment agency on a contract that takes you to Northern Ireland, where you’re being supervised by another person, then you’re ‘it’?
I can feel your indignation! And, yes, that’s why many people are a bit put out by this. It seems somewhat unbalanced. If you were working through an employment agency on a contract that takes you to, say, Cork, and you were being supervised there… well, it appears you wouldn’t be ‘it’ anymore.
I should point out that this isn’t set in stone yet, of course. HMRC have asked for input from anyone with an interest, and as such there have been a number of petitions, questionnaires and documents flying around asking for opinions on the matter. You could also contact HMRC directly if you wanted to be involved. Organisations such as the IPSE are involved in the process as well.
Just to underline this, then: as freelancers or contractors who employ ourselves, we should be fine? The government isn’t going to stop paying for our train tickets?
Er… I’m not sure you should be seeing it that way, anyway, but yes – the initial aim involves ‘levelling the playing field’ for those who are treated the same as an employee. So we’re talking about those working under an umbrella or those caught under the IR35 rules. HMRC’s main point is fundamentally this: if, to all intents and purposes you are an employee, then why should you be able to claim travel and subsistence when an actual employee can’t?
As an accountant yourself, do you agree with all of this?
To an extent, but most individuals that this targets don’t often have the same benefits as an employee, so there’s so much more that needs to be taken into account.
The subsistence side worries us a bit, too. The dictionary definition of ‘subsistence’ is, ‘the action or fact of maintaining or supporting oneself, especially at a minimal level.’ Does George Osbourne want me to stop subsisting, even at a minimal level?
In fairness, you don’t eat to work, you eat to live. So their argument is, why should HMRC give you relief for what you have to do anyway?
Ah…
…to which the counter argument is, if you didn’t have to travel 100 miles to work you would eat at home or take a packed lunch – which costs considerably less than eating out, in most cases.
There’s a deadline of September 30 for comments. Do we need to do anything? Can we make comments if we want to, and will anyone listen?
If you want to be involved you can write to HM Revenue and Customs. They will only accept written responses and places are limited. Whether they will listen is up for debate, but I guess you won’t know until you try.
If changes are to be made to this tax relief, when can we expect to see them take effect, and who should we call to make sure we’re getting the most tax-efficient results from the situation?
It’s hard to say for sure, but I would be surprised if they came into effect before the start of the new tax year, due to the amount of work involved in changing processes and systems to accommodate any change, as well as informing people of the changes. However, they may change it the day they announce it – they did that with the VAT a few years ago. This is HMRC we’re talking about, so it’s anybody’s guess at the moment. We’ll keep you informed though. Watch this space.
You can reach Kenny, or any other of the lovely people at My Accountant Friend, the on-demand, online accountants, on 0207 100 6011 or at www.myaccountantfriend.com/contact. Keep up with news on the Tax Relief for Travel and Subsistence Consultation right here on the Life Hub.
