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Weathering the storm? Umbrella companies continue to face HMRC challenges
2024 has seen a number of cases taken to Upper Tribunal by umbrella companies challenging the treatment of expenses – with little success so far.
The legal cases centre around the employment status of the contractors, and whether the different assignments meant that their places of work were deemed as “fixed and permanent” or “temporary” workplaces.
Umbrella companies who have treated assignments as happening at temporary workplaces, meaning that contractors could claim certain travel and subsistence expenses and were not subject to PAYE and NIC, are now facing the possibility of being liable for the tax payable.
For businesses facing challenges from a legal ruling there are important decisions to take into consideration. If the liability is above and beyond what the umbrella company can pay – particularly considering these businesses tend to not be asset rich - continuing to trade would likely result in HMRC taking enforcement action.
Andrew Bayley, Restructuring and Insolvency Director at Leonard Curtis and recruitment sector lead, commented “We know there are a number of businesses with open enquiries with HMRC, who would be facing serious HMRC liabilities if they are ruled to be liable for the tax.
“We are currently working with umbrella companies going through this process to support them through the potential landscape they find themselves in – one they’ve not had to face before at such magnitude – and the earlier the intervention the better, to ensure there are options available.”
The team at Leonard Curtis has significant experience of assisting businesses in this sector, so if you advise any umbrella companies who are concerned about this potential exposure, then please talk to us. An early conversation increases the options available and helps ensure management remain in control.
Get in touch with Andrew Bayley on 0161 831 999 or andrew.bayley@leonardcurtis.co.uk.
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