HMRC are looking to make the management of tax completely digital over the next few years, so they have introduced a new scheme known as Making Tax Digital or MTD for short. All business taxes will be part of the MTD scheme, but for now, only VAT has an actual roll-out date, which is 1st April 2019.
The essential elements of MTD for VAT are:-
1) Businesses will be required to maintain digital accounting records. Maintaining paper records will cease to meet the legal requirements in tax legislation.
2) Businesses and organisations will be required to use a functional compatible software product to submit their VAT returns to HMRC. The software will use HMRC’s API (Application Program Interfaces) platform to submit information to HMRC. The current HMRC online tax return services will be withdrawn for those within the scope of the MTD rules.
Government restricts Tax Relief on Travel & Subsistence
Last Updated December 2015
Under new Government measures to take effect from April 2016, tax relief for home-to-work travel expenses will not be available to contractors and other temporary workers who are subject to supervision, direction or control of any person ("SDC").
Who will be affected?
Any worker who supplies their labour via an intermediary, such as a recruitment agency, umbrella company or personal service company.
What is changing?
The temporary workplace travel rules currently allow temporary workers to obtain tax relief for their home to work travel provided that attendance at the workplace is for a temporary purpose and of limited duration.
In April 2016 Government will disallow tax relief on temporary workplace travel for those workers who are subject to supervision, direction or control of any person, ("SDC").
What exactly is SDC?
Supervision is someone overseeing a person doing the work, to ensure that person is doing the work they are required to do and it is being done correctly to the required standard. Supervision can also involve helping the person where appropriate in order to develop their skills and knowledge.
Direction is someone making a person do his/her work in a certain way by providing them with instructions, guidance or advice as to how the work must be done. Someone providing direction will often coordinate how the work is done, as it being undertaken.
Control is someone dictating what work a person does and how they go about doing that work. Control also includes someone having the power to move the person from one job to another.
How will this affect Umbrella Workers?
Umbrella workers will still be able to claim tax relief on temporary workplace travel provided that it can be proven that the worker is not caught by SDC.
Umbrella workers caught by SDC will be offered alternative Umbrella solutions.
How will this affect Personal Service Company Workers?
Workers with their own limited companies (PSCs) who are outside of IR35 will not be subject to the SDC test and will still be able to claim tax relief on temporary workplace travel.
Those who operate inside of IR35 will likely to be considered caught by SDC and will not be able to claim tax relief on temporary workplace travel.
Need assistance with your particular arrangements?
For help selecting the right structure that meets the upcoming legislative changes and suits your particular circumstances and working arrangements please contact one of the team on +44(0) 208 735 6370.