BUDGET SPEECH - The Facts

The Budget always brings good news for some and bad news for others. Those that have been flagrantly ignoring the law for the last 5 years, will find that these days are over. 

The legislation has aimed to level the playing fields, and following the enhancements to the proposed legislation, it looks like it may achieve this. 

Following please find answers to the most important questions that have been asked by contractors since December.

A. Umbrella Companies: Are they inside the legislation or not?

From the 8^th of December (2 days after the Pre-Budget Speech) we said “PAYE Umbrella Companies” would be outside the scope of the MSC definition - today we have it in black and white from various areas of the Budget:

1. “….who accepted the Governments’ position that Umbrella Companies are not covered by the draft legislation…”
Paragraph 3.33 taken from the supporting report issued by the Treasury: Tackling Managed Service Companies: Summary of Consultation responses.

Atlantic Umbrella Comments:
We include this here to show that over the last few months a lot of mis-information has been expounded by MSC operatives, who have deliberately mis-led contractors into believing that the Treasury had Umbrella’s in their targets. This extract shows that this was never the case. In short, contractors – you have been lied to.  

      2. “….Chapter 9 of ITEPA defines an MSC by reference to certain criteria…”

“There will be exclusions from Chapter 9 for employment agencies and employment businesses which do not influence or control finances of companies…..”
Taken from Paragraph 10 and 11 of Budget Note 46 issued by HMRC. 

            Atlantic Umbrella Comments:
            PAYE Umbrella Companies are in fact Employment Management Businesses.

Atlantic Umbrella along with three other compliant operative’s collectively put in representation to the Treasury, advising on the implications of the proposed legislation. 

One of the issues covered in our representation was an explanation of how Umbrella Companies provide a beneficial role in the contracting market. A lot of our concerns and recommendations have been echoed in the Consultation document.

3. “An MSC is an organisation which makes payments exceeding what the individual would have received if it had been employment income”
            Taken from Chapter 9 of the ITEPA. The new definition of an MSC now includes this additional criterion. 

            Atlantic Umbrella Comments
            This categorically takes Atlantic Umbrella and other PAYE Umbrella Companies out of the legislation, and the definition of an MSC. 

B. Umbrella Companies: Can contractors claim expenses?

Above it should now be abundantly clear that Umbrella Companies fall outside the MSC legislation. 

With that in mind, Atlantic Umbrella contractors’ are allowed to claim legitimate expenses as before, with absolutely no change to the way these are claimed. 

We offer expenses under Schedule E and to date still hold our HMRC issued dispensation. For more detail on what can be claimed please click here.

C. MSC Operatives: What happens to them?

      Further detail to follow.

[ more Atlantic News ]

[ back to homepage ]