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New HMRC rules for recruiters to know about

Be careful of shiny suits touting models that revolve around artificial arrangements

April sees a raft of new rules for the labour supply chain. Restrictions to travel and subsistence, new salary sacrifice rules, director’s liabilities, dividend tax changes and more means the whole supply chain needs to be aware and working together. We spoke to Jovan Pavlicevic, MD at forest to understand the new rules.

Salary sacrifice

Something that seems to be catching recruitment directors by surprise is the changes to salary sacrifice. These were announced a year ago but little attention has been paid to them – instead the changes to T&S (travel and subsistence) have been grabbing headlines.

However, the salary sacrifice changes are as important, if not more, than changes to T&S. These changes effectively mean that the way umbrellas work has to change. Read the forest whitepaper to understand the changes in more detail.

Business process outsourcing

Some umbrellas will not adapt to the new rules and this poses a massive risk – ironically mostly to the umbrella’s own directors thanks to tough new director’s liabilities. Some umbrellas are devising complex new models that seek to skirt the new regulations – as ever, if it seems too good to be true, it is. So be careful of shiny suits touting models that revolve around artificial arrangements. These will be caught by tough new anti-avoidance measures. The only long term, sustainable, compliant route to take is BPO (business process outsourcing).

So where’s it all headed?

As we’ve seen in places like the USA and Australia for decades, BPO isn’t about tax. It’s about bringing in a professional partner to handle the work you shouldn’t be dealing with, which allows you to grow and scale. Whichever way you look at it, HMRC have made their direction of travel clear. Beginning with IR35, and working through the years, regulations have only become tighter… Click here to see the timeline and HMRC’s direction of travel, and to learn why it’s important to engage the new rules head on, rather than take risks.

By Jovan Pavlicevic, Managing Firector of Forest Group

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