Agencies warned about ‘unsupervised’ contractors

The debate over what constitutes employment as opposed to self-employment has raged for a long time. For every case that appears to be clear-cut, there is one where the definition isn’t quite so obvious, and it is the latter cases that frequently come under scrutiny.

The main factors used to determine someone’s employment status have been identified as ‘supervision, direction and control’, and these are designed to reflect the degree of autonomy that individuals have over their working lives.

In an attempt to circumvent the recent change to the way contractors are able to claim tax relief on their expenses, some agencies have been advising clients to describe their temporary staff as ‘unsupervised’.

However, this practice has been described as ‘risky’ for both those who are advising such behaviour and for those who might take such advice, as well as potentially damaging to relations between clients and agencies.

The issue was raised by the union Unite, who leaked a presentation that had been given to clients by an agency claiming that they had ‘The Solution’ to the issue of expenses for workers who operate under Supervision, Direction and Control.

Although the agency claimed that their advice had been prepared and approved by a specialist QC, experts have advised that their recommendations are simply incorrect. They are reminding agencies that it is not up to businesses or the workers they engage to make decisions on SDC and the classification is up to HM Revenue and Customs to determine.

Agencies who take this advice could be putting their board directions at risk and making them personally liable under the Travel and Subsistence legislation. Although there are those who believe that this approach is understandable given the implementation of the travel and subsistence changes by the government, it is also clear that there is no excuse for trying to undermine the legislation now that it has been introduced.

For anyone who is curious about their potential earnings as a contractor our take-home pay calculator is a quick way to work out how much you could be bringing in. For those who aren’t sure about what they can and can’t claim tax relief on, our guide to contractor expenses and our advice on IR35 both include plenty of information.

If you want to know how you could be affected by the recent changes in legislation, our accountants can give you advice on your specific circumstances and help you to ensure that you are compliant with all the relevant legislation. Call our friendly team on 01442 275789 or email newbusiness@sjdaccountancy.com.

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