Baxter&Co - 2021 Spring Business Support Guide

7 The Self-employed case (Hamish Taylor v HMRC (TC07893)) concerned a contractor based in Melrose in Scotland, who undertook various assignments in Swindon (for higher pay rates) and based himself there for several months. HMRC denied relief for his hotel costs in Swindon and his travel costs from Scotland. The Tribunal held that staying in Swindon for some 165 nights during the tax year meant that his base for thework on a variety of sub-contracts was in Swindon. The disputed expenses were effectively general commuting costs for this Swindon work and so were disallowed. Had he gone to Swindon for a specificcontract, the travel and accommodation costs would probably have been deductible, as his base of operations would have still been his home in Scotland, even if the engagement in Swindon had lasted several months. The employee case (Narinder Sambhiv HMRC (TC07717)) concerned a worker normally based in Birmingham who was sent to work at various locations in London for a period of several years, travelling home at weekends. He believedthat each site qualified as a temporary workplace, so claimed relief for his travel and subsistence. He had not worked at any of the sites, individually, for more than 24 months, the statutory limit for a workplace to be regarded as temporary under the rules for employees. The FTT found that the journey timesto each site from his accommodation in London differed by no more than half an hour and the cost varied by no more than £14, so (in the Tribunal’s view) the change of worksites was not substantial. His workat various sites in Greater London should therefore be treated as one workplace, which had become a permanent workplace after 2 years. The total expenses disallowed were over £20,000. Whether you can get tax relief on expenses is often a significant factor indeciding whether to take on new Self- employed work far from home or, if you are an employee, in deciding to agree to a secondment. Please speak to us to get clarity onwhat are often complex rules, ideally before you take on such assignments. Personal Service Companies 6 April 2021 saw major changes to the tax rules for workers providing services via their own ‘Personal Service Company’ (PSC). Since April 2017, the worker’s clients in the public sector have had to make decisions over the worker’s tax status; this is now extended to private sector clients too, unless those clients are ‘small’. There is also an exclusion for clients that are neither UK resident nor have a fixed place of business in the UK. Where they apply, these ‘off-payroll working’ rules replace the previous IR35 regime, meaning that HMRC cannot come after the PSC for unpaid PAYE and National Insurance Contributions (NIC), if the effective relationship between the worker and client for tax purposes is regarded as employment rather than self-employment. It will be the end- client, or fee-payer (if different), which will be liable to withhold the worker’s payroll taxes when paying the PSC’s invoices. Note, however, that the PSC still has IR35tax risk where the client is either small ora non-UK business. Any non-small UK private sector client, or public sector client, must now provide a Status Determination Statement (SDS) to the contractor and all relevant parties (e.g. a recruitment agency) in the contractual chain, at thetime the contract starts or before the off-payroll worker starts work. This will indicate whether the client intends to put the worker on the payroll for tax purposes. Some businesses contracting with PSCs have been slow to issue these,so if you have not received one you should chase this up with your client. If the contractor disagrees with the decision made by their client on the SDS,they can ask the client to reconsider it. We can help you decide whether an SDS appears to be correct or not.

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