AEMC NEWS

24th February 2010
HMRC have recently issued a consultation in respect of travel and subsistence expense schemes and the arrangements for temporary workers paid at or near National Minimum Wage (NMW).
Please see the following link: www.hm-treasury.gov.uk/consult_minimumwage_expenses.htm
HMRC's view has recently changed and now is that salary sacrifice expense payments can reduce a workers payment below that of minimum wage, which is clearly not what the legislation was intended.
HMRC are clearly not happy about this latest development and hence the need to change legislation accordingly
The AEMC's view is that the national minimum wage was introduced for a reason and encourages its members not to adopt policies that can take an employees wages below the (NMW).
The AEMC will contribute to the consultation.
The AEMC's view is that all workers regardless of the employer should be paid at least the national minimum wage.
25th April 2009
Response to conduct of employment agencies and employment businesses regulations 2003 consultation and impact assessment - march 2009.
8th May 2009
Written Ministerial Statements - Business, Enterprise and Regulatory Reform.
The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): Following my statement of 22 May 2008, Official Report, column 32WS, I am today launching a consultation on the implementation of the Directive on conditions for temporary (agency) workers-Directive 2008/104/EC-the "Agency Workers Directive", which was published in the Official Journal of the European Union on 5 December 2008. Copies of the consultation paper, which includes a copy of the Directive, are being placed in the Libraries of both Houses.
The Government intend if possible to introduce the necessary legislation (regulations under section 2(2) of the European Communities Act 1972) in this current parliamentary session.
The aim of the Directive is to ensure the protection of temporary agency workers by applying the principle of equal treatment, as set out in article 5-that the basic working and employment conditions (duration of working time, overtime, breaks, rest periods, night work, holidays and public holidays and pay) of temporary agency workers shall be, for the duration of their assignment at a hirer at least those that would apply if they had been recruited directly by that undertaking to occupy the same job. There are also other entitlements that aim to improve the situation for agency workers in other areas, for example, in terms of improved access to permanent employment and training. In order to liberalise the agency worker sector across the EU, the Directive also seeks to address restrictions and prohibitions on agency work which exist in many member states to see if they are justified.
Importantly, the Government secured text in the Directive allowing for a qualifying period before equal treatment is applicable, if this is provided for via an agreement between "social partners at national level". This allows implementation on the basis of the agreement reached between the CBI and the TUC on 20 May 2008, under which agency workers will have an entitlement to equal treatment in relation to the basic working and employment conditions after 12 weeks in a given job. The consultation document makes clear the Government's intention to follow this approach on this key point, and also sets out proposals or invites views on a range of other matters on which decisions are required to inform UK implementation
Agency work is a valued route into employment and there are currently around 1.3 million agency workers on temporary assignments across the UK in a range of public and private sector roles, playing a vital role in enabling employers to respond flexibly to changing business needs. In line with the Government's twin objective of ensuring appropriate protections for agency workers while maintaining a flexible labour market, we support the principle in the Directive of ensuring fairer treatment for agency workers along with maintaining the combination of flexibility for workers and employers provided by the agency sector.
This consultation will run for 12 weeks, until 31 July 2009, after which we will publish the Government's response. In line with normal practice for a change of this kind, we then intend to conduct a further consultation on the draft regulations, and to invite views on what practical advice users would welcome in the accompanying guidance.
30th April 2009
HMRC Clampdown - Revenue to pour quarter of its £4bn budget into battle against tax evasion
28th April 2009
The Chancellor of the Exchequer made it clear in his recent Pre-Budget Report that he would leave the current rules on tax relief for travel expenses unchanged But he also promised that the HMRC will refocus its efforts to ensure that the current regime is properly applied. He added: "If compliance does not improve, the Government may return to this at a later date."
The message to the industry is clear. We must clean up our own stables or face action that could undermine the industry. An easy option is to go on as before, hoping that the government has bigger fish to fry and won't do what it has promised.
We have decided to be proactive and seek to build a strategic relationship with ministers and the HMRC. We also want our trade body to increase understanding of the industry amongst parliamentarians of all parties.
We have therefore decided to engage the services of a political adviser, Gary Kent, a veteran insider in Westminster who has worked there for 22 years as a researcher, columnist and lobbyist for cross-party causes.
Gary Kent said: "the AEMC now has the opportunity to build itself as a respected trade association that can convince opinion-formers and decision-makers that its activities benefit temporary workers and the economy as a whole. The sector must demonstrate that self-regulation can work for everyone."
He added: "My aim is to bring AEMC representatives together with parliamentarians and others to make it plain that the AEMC is deadly serious about compliance. It has to prove beyond reasonable doubt that it is willing and able to step up to the plate. Even if the sector weren't interested in politics, politics is interested in the sector."
26th February 2009
Latest AEMC meeting with HMRC reveals plans for a new expenses regime.
In talks with HMRC it is clear that the government's focus remain on expense allowances and dispensations. Not just focussed on the umbrella industry the new proposals do introduce a different approach. AEMC will continue with talks with the intention of influencing government to introduce fairness throughout the industry.
26th November 2008
The pre budget report contained the welcome news that the government has decided not to change the tax reliefs on travel expenses, following the recent consultation.
Adrian Marlowe, of specialist consultancy Lawspeed which represented many umbrella companies within the consultation, said “this news will come as a huge relief not only to umbrella companies, but also to the large number of contractors for whom tax relief is a significant factor in accepting site based work.” He went on to say “however this will not be the end of the matter as I am informed that the government will now set up a task force with greater emphasis on compliance and dispensations”.
Lawspeed had represented the AEMC and various other companies in the industry. Adrian said “we are very grateful for the tremendous support that was provided for the representation. It goes to show the value in providing a cohesive and coordinated strategy, and I hope that this continues. However, it is entirely possible that economic factors played a part in the government's decision, and there is much more work to be done to help provide a level playing field and a suitable compliance structure that will be acceptable to HMRC. We look forward to working further with our clients, particularly the AEMC which has been set up specifically for that purpose, in order to achieve a good long term outcome.”
The AEMC also welcomed the decision. Adrian Learer, a director of the AEMC commented “the AEMC campaigned for precisely this result, but I urge that there should be no complacency. The reasons for the consultation in the first place should not be forgotten and a return to practices that the government clearly finds unacceptable could be disastrous for everyone in the industry in the long run.”
The AEMC now intends to further address government aims. Top of the list will be the issue of dispensations, which are understood to be a key area of concern for both government and umbrella companies.
The AEMC is open to application to any umbrella company that employs its workforce. Benefits of membership include overcoming agency concerns about compliance and application of the Managed Service Company legislation.
13th October 2008
AEMC puts in response to consultation
Following the government's consultation document entitled Tax Relief for Travel Expenses: Temporary Workers and Overarching Employment Contracts, the AEMC has provided a detailed response.
Adrian Marlowe, director of the consultancy Lawspeed which prepared the response on behalf of AEMC and a number of other interested umbrella companies, said "the principal concern of the AEMC is that the government has not historically recognised some of the difficulties which its own policies have created, for example in allowing dispensations that do not broadly reflect the real operating position. This has led to some perceived abuses which in turn have resulted in the consultation. Were HMRC to review how it issues dispensations and the application of round sum expenses then it may not be necessary for the law to be changed."
Pointing to the short time since AEMC was formed, Adrian went on to say "the industry as a whole is relatively new and there were always bound to be learning curves for all involved, including HMRC. The AEMC was set up directly to represent those companies that apply the rules properly and to help others to understand compliance issues. This not only benefits member companies and those agencies and hirers that use them, but also HMRC as more companies turn to applying the expense rules as HMRC would like to see them. Unfortunately there has been little time for HMRC to assess the benefits. The AEMC would urge the government to work with all interested parties rather than take the extreme view and effectively write off the umbrella industry by removing tax relief on certain expenses."
Directors of the AEMC have had several meetings with the Treasury. Adrian Learer, who has attended all the meetings, said "the meetings were constructive and I am convinced that Treasury recognises that the AEMC has a role to play in helping to regularise the industry. The AEMC remains committed to that objective."
AEMC will continue to monitor the government's position. It is widely expected that an announcement will be made in the pre budget report, 24th November 2008, to clarify the government's intentions following the consultation.
25th August 2008
AEMC welcome RACS as a new member.
23th August 2008
The latest government consultation Tax relief for travel expenses: Temporary workers and overarching employment contracts – may be potentially disastrous for umbrella companies and those agencies that use a zero hours employment model.
Particularly so far as umbrellas are concerned the scrapping of expense allowances for umbrella agency workers would lead to the end of the umbrella model, with many businesses closing as a result. If this were to occur the only alternatives for workers would be to operate PSCs unless they work through the agency PAYE regime. The use of PSCs places agencies in more serious risk of application of the MSC rules, with potential increased risk of debt transfer.
Whilst the government appears to also be considering allowing the current position to continue this is probably an option available for cosmetic reasons only. A third option, of tightening up compliance on expenses linked with transfer of debt provisions, offers a possible way forward but it is by no means certain that this option is the government's preferred route.
The AEMC, the umbrella trade body, in conjunction with Lawspeed, has arranged a meeting to discuss the issues with the intention of forming an action group to investigate options and represent to HMRC within the consultation. This is seen as an urgent first step to protect the umbrella industry, and the interests of the limited company contractor supply market as a whole. Lawspeed has considerable experience in this arena and in representation to government, having historically achieved notable results.
Whilst the consultation ends on 13th October 2008, there is no time to be wasted. You are invited to attend the meeting, which will take place at 10.00hrs on the 31st July at The Naval Club 38 Hill Street Mayfair London W1J 5NS (if the venue changes due to number of attendees we will advise as soon as possible). The meeting is open to umbrella companies and related accountants. There is no charge. Reservations can be made by calling us on 01273 236236.
For those of you unable to attend please indicate whether you are interested in joining the representative group. We will then provide details after the meeting.
22th August 2008
The AEMC welcomes any attempt to ensure compliancy throughout the umbrella and agency market place and that following on from our initial meeting with HMRC and Treasury we fully expect to be able to assist with the consultation process
22th August 2008
New Treasury Consultation - This new consultation comes at a time when there is some uncertainty in the industry following the announcements in May concerning the extension of rights to agency workers. Umbrella companies offer agencies a significant advantage provided that they are operated compliantly. It would seem that the Government expects the non compliant activities of some umbrellas to continue to affect the market – hence the need to further regulate. It could also be that the Government sees a removal of expense allowances as a further means of raising revenue.
This issue is not entirely surprising following our discussions with HMRC and Treasury earlier this year. However the AEMC will be reviewing the latest proposals over the next few days and will advise its members as to steps that can be taken.
8th August 2008
AEMC welcome Work2Live as a new member
30th July 2008
AEMC welcome Crystal Umbrella as a new member
8th April 2008
AEMC welcome Atlantic Umbrella and PlanIT as new members
19th March 2008
HMRC Budget HMRC have expressed concern at Umbrella companies abusing the Dispensation regime, through the use of Overarching Contracts.
19th March 2008
AEMC to meet with HMRC on the 2nd April 2008 to discuss HMRC concerns highlighted in latest Budget