Supervision, Direction & Control provides an understanding of how a contractor is engaged with the end client. Although there is no definitive answer as to whether a contractor is under SDC or not; HMRC have tried to provide a snapshot of how they consider the legislation would work in practice.
For the purposes of an umbrella company contractor, SDC will ascertain whether or not expenses can be claimed. However, since the introduction of the T&S Legislation, if a contractor can prove that they are not under SDC / or the right thereof, then they must process expenses via self-assessment. Not by claiming tax relief at source via the umbrella company!
Please find detailed examples of workers who would or would not be subject to supervision direction and control under the new Legislation:
Supervision, Direction & Control (SDC): Locum Pharmamcist
Locum pharmacist Sarah is a fully qualified pharmacist. For the last five years, she has preferred to work as a locum. It offers her regular work, flexibility and various locations to work on short engagements. Sarah obtains all of her work through an employment agency.
The employment agency contact Sarah to advise there is a vacancy available to work in a privately run pharmacy/shop in a small market town. It is to provide cover whilst the proprietor/pharmacist is on holiday for three weeks. Sarah is given the proprietors contact details and they meet to discuss the engagement. The proprietor tells Sarah she will be working in the pharmacy at the rear of the shop. She will be dispensing prescriptions to customers and providing advice to them as necessary. The Pharmacy also has two sales assistants who will deal with general sales, hand over the dispensed prescriptions to the customers and assist Sarah as necessary. It is agreed Sarah will take the engagement. Continue reading here.
Supervision, Direction & Control: IT Consultant
Paul is a skilled IT Consultant who specialises in designing, building and implementing websites for businesses. He obtains his work via an employment business which finds him jobs with clients. A retail clothing company ask the employment business to provide an IT specialist for a two week engagement. This is to do some internet based IT work. The employment business contact Paul and as he wishes to take the engagement. Arrangements are made for him to attend an interview with the client. Continue reading here.
SDC: HGV Driver
Harry is a qualified HGV Driver who holds a Category C&E licence. A furniture manufacturing company in Manchester contacts the employment business and asks them to supply a fully qualified HGV driver to their factory. This is to make a delivery of furniture to a customer. The engagement is for one day only. The employment business contacts Harry who is offered the engagement. He is told to report to the factory at 8am the following day. Continue reading here.
Supervision, Direction & Control: Care Worker
Claire is a qualified care worker whose work consists of undertaking general household duties for elderly persons in their own homes. This is to ensure they are properly cared for. Claire has done this type of work for many years. She obtains this work via an employment business, which provides her with regular offers of work that she can accept or decline.
An independent Care Provider contacts Claire’s employment business and asks them to supply a qualified and experienced care worker for the next three months, to visit numerous elderly clients. Claire is offered the engagement and she accepts. The Care Provider supply Claire with her identification badge. They tell Claire she will start work in two days time. Before which she will be e-mailed a schedule containing the names and addresses of her customers and the allotted time slots for each visit. Continue reading here.
Assessing your SDC Status
We would recommend that if you believe you are not under the Supervision, Direction or Control then you speak directly with HMRC to allow them to confirm your individual situation, if you are not deemed under SDC then you should be able to claim the tax relief via self assessment at the end of the financial year.
It is also our interpretation that if you are deemed inside IR35 due to Public Sector rule changes, then we believe that the legislation is highly likely to deem that you are under SDC, and as such no expenses will be allowable at all.