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HMRC beginning to turn the screw on Umbrellas

by bob.jones on May 25th, 2010

I was talking to an ex colleague at HMRC today and was told about two dispensations applications that had been received. The conversation was enlightening.

In one these cases the application was made at the time the company started trading and although an overarching contract had been supplied to HMRC they wanted to see how it worked in practise. They requested three signed copy contracts and wanted details of how expenses were claimed, verified, supported by documentary evidence etc. This involved supplying screen prints of the relevant part of the website in demonstration mode etc etc. In the meantime HMRC staff were waiting for the revised instructions regarding over arching contracts that was published on 5 May 2010. All this took months and despite several reminders (both written and phone calls) nothing happened for a number of weeks until the revised guidance was made availalbe to staff at which point a new series of questions were asked about the contract itself. Apparently that particular application is still under enquiry – in the meantime the company is trading without the dispensation using the benchmark scale rate for subsistence and reimbursing travel at the mileage rate.

In another case the Umbrella did not have “Umbrella” in the title  and the application for the dispensation did not disclose to HMRC that this was in fact an Umbrella. My ex colleague told me that if it came to light at a later date that the company was an Umbrella the dispensation would be withdrawn retrospectively –  a worrying thought.

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