The Gabem Umbrella Companies Blog:
Home of Umbrella Company Gossip Online

As some of you may have spotted Susan has updated her Legal Bits, covering a variety of topics in an attempt to catch up on recent events. If you have any suggestions on what you would like her to cover next month get in touch as she would (as always) be very happy to hear from you.

Another thing that has changed is the format of the blog here. The function is pretty much the same, but as each post also has it's own page now it makes linking to specific articles within the blog much easier.

In my trawling of umbrella company and contractor related news items I came across an old article about abusing expense dispensations written by the guys over at egos. It speaks with regard to an HMRC crack down on dispensations awarded to umbrella companies. Whilst it's been almost a year since the article was published, I was thinking about the potential role that expense dispensations could play in HMRC's current hunt for non-compliant umbrella companies.

HMRC's current approach (which I speculated on in last Wednesday's blog post), looks like it could be pretty effective in itself for rooting out less scrupulous umbrella payroll providers, but dispensations may well give them a further angle of attack. As egos point out dispensations can be withdrawn retrospectively, leaving the company it was issued to, liable "for all the tax and NI that it would have had to deduct", not just what the umbrella company would deduct from the date the expense dispensation was actually revoked.

Now for any umbrella company that's stretching the spirit of it's expense dispensation a little thin that's a pretty frightning prospect. As seems to be the trend in increasingly incestuous umbrella company business there would be repercussions all down the line. Any non-compliant provider that was landed with such a bill would undoubtedly fold (the larger the company the larger the bill), taking any money they were holding down with them. This in turn could hit the agencies hard, as contractors are left unsatisfied and in potential financial trouble from loss of wages. The knock on effect could even impact any umbrella companies they previously competed with.

I admit now that this is all rather a moot point for those of you currently working as an employee of a Gabem umbrella company, as our expense policy being what it is requires receipts for all expenses regardless of dispensation (which we have applied for and I will keep you posted as and when I have more news).

I'm just very interested to see what HMRC will come up with and who out there has been cheating. Fingers crossed the resulting fall doesn't effect you, us or the rest of the contracting industry.

Hugo
11/02/2009