Contractors' agencies in a spin about T&S expenses

Contractors are not alone in being in a spin about travel and subsistence expenses, despite the ‘SDC’ rules that govern eligibility being almost two months’ old.

In fact, a recruitment law firm says it has received “a range of queries about liability and what to do” from recruitment agencies, ever since the rules took effect on April 6^th.      

It means that recruiters are “still unsure as to what actions they need to take to avoid getting caught” by the new rules, which contain a debt transfer provision, said the firm, Lawspeed.

One issue is that agents are being told there is “no reason” not to help contractors obtain evidence from the end-hirer about whether the contractor is under Supervision, Direction or Control (SDC).

Lawspeed’s Theresa Mimnagh has a compelling one. “An agency asking a hirer to give a statement is drawn into the tax avoidance proposition and could be caught up in a tax investigation," she said.

“[This is the case] whether or not the [SDC] statement is correct. If it is incorrect, HMRC may go after the hirer, inevitably resulting in affecting the agency’s relationship with the hirer.”

Mimnagh has her doubts about whether an end-hirer’s staff will be able to compose something that goes beyond the simplistic waivers and generic statements that HMRC has said it will not accept as satisfactory evidence to demonstrate an absence of SDC.

“Who at the hirer can prove there is no [SDC]?” she asked. “[And who at the hirer] understands the [SDC] test sufficiently?”

The lawyer warned against other “quick fix”-style actions being taken in light of the T&S legislation, such as changing contracts in an attempt to rule out the possibility of there being a right to SDC, saying such a redrafting is “dangerous.”