Even though new travel and subsistence rules for intermediaries came into force on 6th April this year, HMRC has now been forced to acknowledge that the legislation is defective.
The guidance issued by HMRC reflects the draft legislation laid before parliament in the Finance Bill 2016. However, the draft legislation contained a technical error about where the supervision, direction or control test applies and this will have to be corrected at the earliest opportunity’.
HMRC have confirmed that new guidance will be issued once the legislation has been corrected.
A corresponding amendment will have to be made to the Social Security (Contributions) Regulations 2001 (SI2001/1004) for national insurance contributions purposes.
HMRC view is that it ‘doesn’t consider that this correction will alter the ultimate result for the vast majority of workers currently engaged through employment intermediaries, including umbrella companies. Those who are working under supervision, direction or control will, in most instances, be akin to those who are an employee’.
The old rules remain unchanged for workers engaged through personal service companies (PSC) and managed service companies (MSCs).
Paul Hughes of the Umbrella Company trade body PRISM commented, “Having been widely criticised for the appalling amended guidance, it now seems that HMRC cannot even write the legislation to align with Parliament’s wishes.”
