Could you start by telling us a little about Lesters and what they do ?
Spencer Kendrick: Lesters have been trading for over 30 years, providing expert payroll and accounting services to professional freelance contractors and recruitment agencies both in the IT industry and other industries.
I’ve heard about this new legislation which means that contractors cannot claim for their travel and subsistence.
Spencer Kendrick: Yes, HMRC have set out proposals to restrict tax relief on travel and subsistence expenses for those contractors who are deemed to be under the supervision, direction and control of the end hirer.
How do HMRC define supervision, direction and control (SDC)?
Spencer Kendrick: Under the SDC definitions, supervision is considered to apply to someone managing a person doing work to ensure it is being down to the specific standard, direction means someone makes a person carry out their work in a certain way by providing instructions and control means someone dictating what work a person does.
How will HMRC test for SDC?
Spencer Kendrick: This will be a very difficult task for HMRC as nearly all contractor assignments have some element of SDC in them. There are discussions going on that suggest it may be tested alongside the current IR35 legislation. What we do know is that all contractors will be deemed as being under the SDC of the end hirer, unless it can be proven otherwise. This puts HMRC firmly in control of the claims.
If these proposals go ahead, I appreciate it can affect the individual contractors but what affect do you think it could have on the industry ?
Spencer Kendrick: Proposals will hit Contractors’ pockets, but these proposals will affect ALL those involved in the supply of contractors. End Hirers and Employment businesses have already reported that these proposals may effectively put them out of business. There will be less movement of skills around the UK and it will be more difficult to attract a skilled workforce which is already in short supply. The UK’s flexible workforce is extremely valuable and should be encouraged by government rather than penalised.
Isn’t it too late for anyone to do anything about this ?
Spencer Kendrick: HMRC will be making changes in April 2016 however it’s not too late to influence the detail of these changes by getting behind a nationwide campaign to make government re-think their proposals.
What do you suggest people do ?
Spencer Kendrick: Contractors, End Hires, Recruitment Agencies and others involved in the supply of flexible workers should get behind the Yes2T&S campaign. The campaign is being run by PRISM, who are the industry’s leading trade association of which Lesters are Accredited Members. There is a simple online form which can be used to show your support. We hope the Yes2T&S campaign will force George Osborne to think again before Britain's 1.6m contractors lose out to the proposed changes to Travel & Subsistence (T&S) in April 2016.
See more on the Prism website or click on the banner below.
Changes in legislation are due to be announced in the Autumn statement which is set for the 25th November 2015. To raise as much awareness as possible, please feel free to pass this information on accordingly as the more people who fill in the online form, the better for all of us associated with the contractual industry.