Frequently Asked Questions

Is Umbrella PAYE right for me/my contractors?

Our Umbrella PAYE is perfect for contractors who:

• have end-user clients who stipulate that contractually the contractors they engage need to be employed (as opposed to self-employed).
• do or do not fall under the supervision, direction or control of the end-user.
• work from more than one workplace within the same assignment/engagement.

Is Build right for me/my contractors?

Build is perfect for contractors who:

• are eligible for the Construction Industry Scheme i.e involved in construction and building works in the UK. The Construction Industry Scheme provides self-employed status and defines the parameters for tax deduction from gross pay. All parties in the contractual chain (agency, end-user and Falcon Contract) need to have CIS status in order for the contractor to be eligible.
• do not fall under the supervision, direction or control of the end-user.
• want to retain their self-employed status.

What does supervision, direction or control (SDC) mean?

a) A contractor providing their services via an employment intermediary is deemed to be under supervision, direction or control (SDC) when the end-user client directs the manner in which they provide those services – i.e. the end-user/client tells the contractor how to perform their duties. We check whether SDC is present on each and every assignment.

b) Since April 2016, contractors who fall under the supervision, direction and control of their end-user client are not entitled to claim tax-free expenses (including mileage), unless they provide their services from more than one workplace within the same assignment. If so, they are able to claim mileage from home to the secondary workplaces; or between workplaces if they travel to more than one during the same day.
Our products and services provide options whether contractors fall under the supervision, direction and control of the end-user, or not.

How can I determine whether my contractors (agency) fall under SDC?

HMRC’s starting point is that all contractors providing their services via an employment intermediary are under the supervision, direction or control of the end-user.

If you need help determining whether your contractors fall under SDC, get in touch. Our SDC check has been developed in conjunction with the UK’s leading tax and employment law advisory bodies and is a robust mechanism for assessing SDC. Call us now on 020 3329 0235.

What expenses am I/are my contractors entitled to claim?

Temporary contractors providing their services via an employment intermediary, such as a recruitment agency, are unable to claim tax-free expenses (including mileage where they are travelling to a single site for the entire duration of their engagement), unless:

• They provide their services from more than one workplace within the same assignment. If so, they are able to claim mileage from home to the secondary workplaces; or between workplaces if they travel to more than one during the same day.
• They are self-employed and do not fall under the supervision, direction or control of their end-user client.

How are supervision, direction or control (SDC) rules policed?

Contractors who provide their services via an employment intermediary are presumed to be under the supervision, direction or control of the end-user unless proved otherwise. Therefore, the agency and the end-user need to demonstrate that SDC is not present on an assignment. Due diligence and scrutiny of each and every assignment contract is required.

However, HMRC doesn’t tend to police SDC compliance by inspecting individual contracts within individual agencies. Instead, its focus is on businesses like Falcon Contract which are inspected regularly to check compliance with these regulations. It is our responsibility therefore to maintain robust and compliant processes and procedures. This also means that all risk lies with us. So your business is protected. Plus, if you want to audit us as part of your due diligence, we are happy to facilitate that.

What is relevant salary sacrifice?

Salary sacrifice is when employees receive non-taxable expense reimbursements instead of taxable salary. The new salary sacrifice rules mean pay cannot be varied by reference to the value of expenses. Authorised Mileage Allowance Payments (AMAPs) fall outside of these rules and can be paid tax-free instead of salary as part of a weekly pay calculation.

What do current salary sacrifice rules mean for my contractors?

Changes to legislation made in April 2016 affected when relief can be given for expenses incurred. The ability for contractors to vary their weekly salary depending on the amount of expenses claimed was removed for most expenses, although contractors who are eligible to claim tax-free expenses can claim them annually via their self-assessment tax return – which we can do on their behalf.

This legislation does not affect Authorised Mileage Allowance Payments (AMAPs) – i.e. the 45p per mile claims that are paid to operatives when they use their own car for business travelling.

How can I be sure your products and processes are compliant?

Our products and processes have been carefully designed under the supervision of the UK’s leading tax and employment law advisory bodies. Our systems and procedures have been and will continue to be audited by HMRC.