Supervision, Direction and Control (SDC) was introduced by HMRC and came into effect on the 6 April 2016. The legislation was created to reduce the number of umbrella contractors claiming tax relief on travel and subsistence expenses. Do you know if your candidates are subject to SDC and how they will be impacted?
Since the introduction of Supervision, Direction and Control (SDC) in April 2016, the number of contractors claiming tax relief on travel and subsistence expenses has plummeted. HMRC decided to introduce SDC to try and balance the playing field between contractors using an umbrella company and permanent employees working for the same client.
Generally, no relief is given for home to work travel and associated subsistence to permanent employees and now the same rules apply to the contractors working through umbrella companies. However, in certain circumstances, where the place of work qualifies as a temporary workplace, or where travel or any associated subsistence is not ordinary commuting or private travel, the above provisions could be modified or dis-applied.
How do HMRC define Supervision, Direction or Control?
SDC is a way of determining the actual responsibilities of your candidates who are working through an umbrella company. For example, if they are supervised carrying out their activities, given direction on how to complete their responsibilities or told they need to do certain tasks when the manager decides it is necessary, they are working in the same way as a permanent employee and thus are no longer able to claim tax relief on travel and subsistence expenses. More information can be found on the HMRC website.
What are considered as travel expenses?
Travel expenses are considered as follows:
- Journeys that are required by your candidates in order to successfully work on their assignments.
- Travelling to a worksite and travelling from a worksite, excluding normal commuting.
- The travelling between home and a temporary worksite (the journey from their home to the temporary place of work and back to their home again from the temporary place of work).
You candidates who are still able to claim tax relief on travel and subsistence expenses should agree a limit with the client before starting on their assignment.
What are considered subsistence expenses?
Subsistence expenses cover the following:
Just like with travel expenses, your candidates who are able to claim tax relief on subsistence expenses should agree a limit with their client before their project commences.
How do your candidates know if they are subject to Supervision, Direction or Control?
Having read their contracts, your candidates should have a good idea as to whether or not they are subject to SDC when they work on their assignment. A majority of your candidates working through an umbrella company will be subject to SDC but it is likely they will want clarification from an expert.
Churchill Knight Umbrella will provide your candidates with a short SDC review when they get in contact with our dedicated team. Our registrationform asks them a few questions that are designed to help us understand their SDC status. Upon registration, your candidates will be asked a few more questions about their assignments if the initial SDC review suggests they might not be subject to it. It is important that your candidates are given an accurate assessment to ensure there are no retrospective HMRC punishments for them and the umbrella company.
Can your candidates claim any expenses if they are subject to Supervision Direction or Control?
Unfortunately, your candidates will not be able to claim tax relief on any travel and subsistence expenses if they are subject to SDC. However, if any of your candidates are considered genuine mobile workers by HMRC, they will be able to claim travel expenses for their journeys to and from temporary places of work.
Why should your candidates still consider using an umbrella company for their payroll?
Despite the introduction of SDC in 2016, there are still a number of benefits available to your candidates if they decide to use Churchill Knight Umbrella as their payroll provider. These include:
- Your candidates will become an employee of ours and will benefit from Sick Pay, Maternity Pay, Paternity Pay and Annual Leave.
- All of your candidates can benefit from a free and impartial consultation to discuss their payroll. Our experts can also provide them with custom take home pay projections based on their rate.
- Churchill Knight Umbrella runs payroll daily to ensure your candidates are paid on time, every time.
- £10 million Employers’ Liability Insurance, £10 million Public Liability Insurance and £5 million Professional Indemnity Insurance is included in our umbrella service.
- And more.
Why should you add Churchill Knight to your Preferred Supplier List?
Churchill Knight is delighted find ourselves on an ever increasing number of Preferred Supplier Lists (PSL) and we believe this is because of the unique and tailored partnerships we offer recruitment agencies. Here are just a few of the benefits of partnering with us:
- Churchill Knight provides multiple payroll services including limited company contractor accountancy, PAYE umbrella, SME accountancy (including accountancy for recruitment agencies), CIS, training and more.
- Churchill Knight is proud to be fully compliant with HMRC legislation – we have never offered or promoted a tax avoidance scheme. Our affiliates and partners include Professional Passport, APSCo and TEAM.
- Our specialists understand that your candidates are your priority and therefore, you will be kept updated with all of their progress at regular intervals.
- Our highly trained in-house Learning and Development department will provide your agency consultants with free training on topics of your choice.
- And more.