HMRC to turn spotlight on umbrella companies

Grant Prior 8 years ago
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The taxman is turning the spotlight on umbrella companies as the clampdown on false self employment in construction continues.

Thousands of site workers are being shifted into being paid via umbrella companies by employment agencies as the industry tries to avoid taking staff on directly.

But industry experts believe HM Revenue & Customs will be clamping down on the practice.

Umbrella companies make PAYE and National Insurance deductions for workers and allow them to offset expenses against their tax bill.

Documents seen by the Enquirer reveal that workers are being told they can offset hundreds of pounds a week in travel and living expenses.

One expert said: “The lads are being told they can offset things like taxis to work and dry cleaning their site gear.

“There’s no way that is going to happen and the revenue is sure to take a hard look at this.

“If the revenue clampdown on this then someone is getting a large back-tax bill.”

Experts predict that up to three-quarters of site workers in some sectors are being pushed into umbrella arrangements following the false self-employment purge which came into force in April.

One union source said: “It’s becoming like the Wild West out there since the phasing out of CIS.

“These umbrella firms are popping up everywhere promising all sorts.

“The lads on site aren’t happy about what’s happening – they just want to be employed properly like every other industry”

An HMRC spokesperson said: “Whether an Umbrella company is compliant with the legislation will depend on the terms and conditions that it engages the worker under.

“HMRC will always look at the contractual terms in making an assessment of compliance.

“For expenses to be eligible to be paid tax free they must meet certain criteria, including being incurred by the worker and reimbursed by the employer.”

Rank-and-file electricians are planning a series of site protests against the proliferation of umbrella companies on Friday.

Sites including the Crossrail Whitechapel  job will be targeted by demonstrators who have been told to “bring their umbrellas”.

The union source said: “Workers have won a few victories on this point already with direct action being the catalyst.”

 

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