Travel Expenses - Good news?

HM Revenue & Customs (HMRC) and HM Treasury's joint consultation to review tax relief on travel expenses paid to workers by agencies and umbrella companies is now taking effect.

They were concerned by the mis-use of dispensations and scale-rate allowances and were considering new legislation. However, in their Pre-Budget Report, the Treasury confirmed that they would not be changing the rules, but would tighten compliance for umbrella companies abusing dispensations.

Beware of Dispensations and Scale Rates

Many recruitment industry newswires were recently reporting this as 'good' news, but for those contractors and agencies using umbrella companies that operate dispensations, the warning was in the small print:

"However, in the light of evidence from the consultation confirming poor levels of compliance in this area HMRC will refocus its efforts to ensure that the current regime is properly applied"

Compliance bandwagon

Undoubtedly, many umbrella companies will now attempt to jump on the bandwagon and drop their 'No Receipts Required' offerings, but whether or not they have the compliance culture or technology to deliver remains to be seen.

The iBalance ethos

Agencies and contractors seeking peace of mind are focusing on the few umbrella companies that have an ethos of expense compliance.

iBalance has always believed that 'scale rates' in the context of umbrella companies are an anomaly and have never used them in over 10 years of operating payment services.

Further Details

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