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The pre budget report contained the welcome news that the government has decided not to change the tax reliefs on travel expenses, but that is not the end of the matter.
Adrian Marlowe, managing director of Lawspeed, said “this news will come as a huge relief not only to umbrella companies, but also to the large number of contractors for whom tax relief is a significant factor in accepting site based work. However this will not be the end of the matter as I am informed that the government will now set up a task force with greater emphasis on compliance and dispensations”. Adrian went on to say “we are very grateful for the tremendous support that was provided for the representation. It goes to show the value in providing a cohesive and coordinated strategy, and I hope that this continues. However, it is entirely possible that economic factors played a part in the government’s decision, and there is much more work to be done to help provide a level playing field and a suitable compliance structure that will be acceptable to HMRC. We look forward to working further with our clients, particularly the AEMC which has been set up specifically for that purpose, in order to achieve a good long term outcome.” Lawspeed had represented many umbrellas, other companies and also the trade organisation the Association of Employment Management Companies ("AEMC") in the recent expenses consultation. The AEMC also welcomed the decision. Adrian Learer, of Plan IT services and a director of the AEMC commented “the AEMC campaigned for precisely this result, but I urge that there should be no complacency. The reasons for the consultation in the first place should not be forgotten and a return to practices that the government clearly finds unacceptable could be disastrous for everyone in the industry in the long run.” The AEMC now intends to further address government aims. Top of the list will be the issue of dispensations, which are understood to be a key area of concern for both government and umbrella companies. Notes:There is a link between compliance and the Managed Service Company (MSC) legislation introduced last year. Agencies should still be concerned to ensure that the service providers they use are not exposing them to risk of 3rd party tax debt transfer. HMRC has already set up investigation units and is actively investigating some operators. Lawspeed offers advice services to any service provider in this area to help achieve compliance and to any agency interested in identifying compliant providers. For more information call Adrian Marlowe, Ravi Murphy or Theresa Mimnagh on 01273 236236, or email to info@lawspeed.com quoting reference “umbrella and agency services”..
The AEMC is open to application to any umbrella company that employs its workforce. Benefits of membership include overcoming agency concerns about compliance and application of the Managed Service Company legislation. For more information see www.a-emc.co.uk or call 0845 1295119. Adrian Marlowe is also a director of the AEMC. For the original consultation document see link at http://www.hm-treasury.gov.uk/consultations_and_legislation/travel_expenses/consult_travel_expenses.cfm.
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