Since the start of the new financial year on 6 April 2016, employment intermediaries have had to consider whether a person is subject to supervision, direction or control (SDC) in their work when deciding whether travel from home to work and subsistence expenses can be paid to workers.
Many Managed Service Company (MSC) providers have used reliefs on these expenses to reduce workers’ income tax and National Insurance contributions.
HM Revenue & Customs (HMRC) has now issued updated guidance on SDC which puts very tight limits on the circumstances where there is considered to be no SDC over the worker concerned.
The new HMRC guidance puts the onus of proof that SDC does not apply on the taxpayer and until such proof is received, will assume that SDC does apply. Therefore, unless proof is provided to show SDC does not apply, employment intermediaries, including MSC providers, will be unable to pay expenses covering travel from home to work or subsistence.
These payments would then need to either stop or be transferred to salary payments and would therefore become subject to Income Tax.
Link: HMRC Guidance