Accountant hails umbrella focus

Damian Broughton, the MD at Blackpool based Danbro
Damian Broughton, the MD at Blackpool based Danbro
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The Chancellor of the Exchequer George Osborn’s pledge to clamp down on tax avoiding companies has been welcomed by a Fylde accountants.

Damian Broughton, the MD at Blackpool based Danbro said he was pleased to hear the chancellors’ focus on the sector and especially the ‘use of so called umbrella companies who deprive people of basic employment rights like the minimum wage and avoid tax’.

In section 1.251 of the Autumn Statement it says: ‘As part of its reform of the rules for employee benefits and expenses in response to recommendations by the Office of Tax Simplification, the Government will stop tax relief from being claimed on reimbursed business expenses when they are paid in conjunction with a salary sacrifice scheme’.

He said: “Compliant umbrella companies do not operate in this way and we applaud the focus on eradicating this practice, which will lead to a level playing field for compliant companies.

“There was also an announcement in section 2.147 entitled Overarching contracts of employment and temporary workers, which states ‘the Government will review the increasing use of overarching contracts of employment by employment intermediaries such as ‘umbrella companies’. These arrangements enable workers to obtain tax relief for home to work travel that would not ordinarily be available. The Government will publish a discussion paper shortly to inform possible action at Budget 2015.’

“This comes as no surprise as there is already a Travel and Subsistence review under way following the Office of Tax Simplification’s report on the tax treatment of employees’ benefits and expenses in January 2014.

“However, the focus on tax relief for home to work travel does not seem to agree with the Chancellor’s speech where he said that the consulting on umbrella’s was to ensure that workers were not deprived of employment rights.”