Having seen the announcements that HMRC were to ‘get tough’ with tax evaders in a targeted investigation spending 24% (£960 million) of their entire £4bn budget for 2009/10 , it has now become apparent that in addition, they are turning their investigations towards Recruiters and Umbrellas.
As part of HMRC’s ongoing review, some of the focus will turn to whether travel, subsistence and accounting expenses are being correctly paid. With three possible outcomes from the investigation, many Recruiters and Umbrellas should be extremely concerned that their incompliant practices will finally be dealt with and they should be well prepared for the consequences.
The three outcomes are simple. The first is that HMRC is happy with how the agency or Umbrella Company operates. The second, being that HMRC is unhappy, and will demand changes are made to operations. The third, being that HMRC decides the agency or umbrella should not have paid the expenses tax-free and in this case a settlement would be agreed between the parties, with one or the other agreeing to pay the tax due.
This is a very serious concern for many involved within our industry. However, agencies that deal with reputable, fully audited and compliant Umbrellas, such as Crystal Umbrella, need have no cause for concern as they can be rest assured that all practices and operations are well within HMRC regulations.
Another focus will be on the “Spotlight Campaign” which is being utilised to weed out those unscrupulous companies which still allow UK contractors to take their money offshore and get out of paying their social contributions used to maintain and balance UK Plc.