The HMRC grants a dispensation to businesses, this means they do not have to report certain expenses, however detailed records must still be kept.
Umbrella companies abusing or not policing their dispensation correctly will have it revoked.
The impact it will have on you as a contractor is a possible tax bill as you are liable for your expenses!
There are four documents that you should request immediately:
- A valid employment contract, which clearly shows that you are a true employee.
- Written confirmation that the Revenue considers the Employment contract to be a true over-arching contract of employment.
- A letter from the Revenue, confirming that the Umbrella Company have a valid dispensation.
- Also ask how the revenue is satisfied with how the Umbrella Company police their employee expenses.
If your Umbrella Company or payroll solution does not provide you with these documents, you need to switch to a compliant payroll solution – NOW!
As a fully compliant umbrella company, Tarpon are able to provide all of the above.
For more information, please read the full HMRC article here.