Employment Intermediaries – Travel and Subsistence (Part 2)

Worker Groups It is clear from the consultation document that HMRC believe that all workers employed by an Umbrella or a PSC are using the rules to avoid tax, but is that really the case. As HMRC have jumped straight from discussion to proposed legislation without undertaking a proper consultation then they seemed to have missed the fact that their own guidance differentiates between worker types.

Group 1: Site Based Workers with No Permanent Workplace Task of Limited Duration Site based workers that attend a site to complete a task of limited duration. Limited Duration is defined as less than 24 months. Most employees have a permanent workplace, and most employees have only one permanent workplace. But there are some employees who have nowhere they attend regularly other than to perform tasks of limited duration or for a temporary purpose. Many site based employees are in this position. They do not have a permanent workplace. This means that they do not have an ordinary commuting journey, so from 6 April 1998 they are entitled to relief for all journeys from home to the temporary workplaces they have to attend to perform the duties of their employment. It is clear that site based workers that move from task to task where clearly intended to be allowed a deduction for Travel, assuming other test are satisfied and it is not believed that HMRC are looking to amend this part of the legislation, as it seems to work as intended.

Group 2: Attendance for a Temporary Purpose An employee may attend a workplace and perform duties there which are not of limited duration without that workplace becoming a permanent workplace, provided each visit is temporary. Example: Fred is a safety officer. He regularly visits a particular factory every month to carry out a safety check. His responsibility for that factory has been a duty of his employment for a period spanning twenty years (so it is not of limited duration). However, the tasks he performs on each visit are self- contained and the purpose of each visit, considered alone, is temporary. So relief is available for the full cost of travel. Where a visit is self-contained (that is, arranged for a particular reason rather than as part of a series of visits to the same workplace for the continuation of a particular task) it is likely to be for a temporary purpose.

HMRC Examples:

Gail is the finance director of a large company based in Scunthorpe. Once a month her duties take her to the company’s production unit in the South East. Her visits are to consider individual investment proposals but she takes the opportunity to discuss local welfare issues as a representative of senior management. The purpose of the visits is not linked, each one is self-contained. So the production unit is not Gail’s permanent workplace and she is entitled to relief for the full costs of business travel.

Gaston lives in Sidcup and has a permanent workplace in Broadstairs. He is a director of a company which has a number of regional offices. He has to attend a director’s meeting on the last Friday of each month in Farnham. Although the directors’ meetings are regularly held in the same place, Farnham does not become a permanent workplace for Gaston because each visit is for a temporary purpose. So he is entitled to relief for the costs of his travel from home to Farnham.

Gemma is employed as a school teacher in Oswestry which is her permanent workplace. Every fortnight she goes to an education authority meeting in Bridgnorth. She is entitled to relief for her travel from home to Bridgnorth because while she goes there regularly each visit is for a temporary purpose. Unless a worker is attending a site to perform a task of limited duration or for some other temporary purpose that is either self-contained the relief should be denied under the existing rules.

It seems that there are three groups of workers:
1. Employees that attend site to perform a task of limited duration.
2. Employees that attend sites regularly for a self-contained temporary purpose.
3. Employees that are engaged on fixed term, agency or other employment contract that are neither 1 nor 2.

By adding the control, direction and supervision test, it would seem to suggest that HMRC are seeking to apply a test that would allow them to assign a debt to an agency where the rules have been applied incorrectly, but it should be limited to those situations where the attendance is not a temporary purpose.

Article wrote by Paul Hughes, I-Paye http://www.i-paye.com/

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