Louise Rayner presents to RI - re T&S solutions 8 March 2016

Who are NumberMill Consulting? “The Mill is a place of tradition and refinement, a firm of REAL PRACTICING ACCOUNTANTS, specifically focussed on supporting recruitment agencies utilising modern state of the art techniques and technology” “Consultants first” COMPLIANCE CONSULTANTS TAX SPECIALISTS FOR CONTRACTORS IPSE IR35 Trained BACK OFFICE SERVICES Interim FD services Pay/Bill/GP/Ma’s Treasury/Banking Payroll - Bureau Umbrella Acctcy Serv Established by Louise Rayner FCCA, MBA - 2000 + Contractors EX CFO Adecco responsible for 40,000 contractors Travel & Subsistence EX Commercial Director Randstad Managed Services RSM Tenon Head of Outsourcing EX MD of a large umbrella MBA Thesis “Developing commercial pricing in MSPs” 22-Nov-18 Umbrella illustration & discussion document

Compliance v Commercial Challenge Unlike others we understand operational and practical challenges We have pragmatic solutions Transparent, honest Clear on risk Professionally qualified Beware of meaningless indemnities! 22-Nov-18 Umbrella illustration & discussion document

2 Pieces of Legislation Finance Act S339 Finance Act 2015 Salary Sacrifice - AMAPS (Authorised Mileage Allowance Payments) is outside of Salary Sacrifice rules (ITEPA 2003) 3.20 Employment intermediaries and tax relief for travel and subsistence – As confirmed at Summer Budget 2015, the government will legislate to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary, such as an umbrella company or a personal service company, where there is a right of SDC Supervision Direction & Control   22-Nov-18 Umbrella illustration & discussion document

T&S Legislation 9 Dec 2016 – SDC 3.20 Employment intermediaries and tax relief for travel and subsistence – As confirmed at Summer Budget 2015, the government will legislate to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary, such as an umbrella company or a personal service company, where there is a right of SDC Supervision Direction & Control  https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/479749/52229_Blue_Book_PU1865_Web_Accessible.pdf   PSC - The proposals have been amended so that those operating through personal service companies will only be effected by the new measure when the intermediaries legislation applies to the contract. Those operating through other employment intermediaries, will be effected when they are under supervision, direction or control in the manner they carry out their work This MEANS ONLY IF CAUGHT BY IR35 22-Nov-18 Umbrella illustration & discussion document

MULTI SITE – ONE END CLIENT The changes – Temporary work place rules Based on the draft legislation with effect from 6 April 2016 the temporary workplace rules are changing where operatives are engaged via an intermediary where the manner of work is subject to supervision, direction or control. Although the temporary workplace rules have additional complexities, a basic element of the pre-April 2016 rules is that a site cannot be a temporary workplace where it is reasonable to assume that the operative’s attendance at the site will: last more than 24 months, or comprise all or almost all of the period for which the operative is likely to hold the employment As umbrella workers are usually employed by an umbrella company under contracts covering multiple short term engagements and sites, they are typically able to meet these conditions. – NMILL CAN REVIEW THE CONTRACTS 22-Nov-18 Umbrella illustration & discussion document

MSC Legislation Sec 688A ITEPA 2003 Treat ALL payments received by workers as income subject to PAYE and Class 1 NIC Also Transfer of Debt – If the debt is irrecoverable, the liability can be transferred up the chain * This is the most aggressive legislation in that it makes Directors personally liable – though untested in case law 22-Nov-18 Umbrella illustration & discussion document

Existence of an MSC Provider “A person who carries on a business of promoting or facilitating the use of co’s to provide the services of individuals Treat ALL payments received by workers as income subject to PAYE and Class 1 NIC All 4 Conditions to be met: PSC – the business wholly or mainly provides services of an individual to a third party client £Amount – the individual providing the service receives the greater amount of the sums received Employment Income – would be less than the amount received under paye Must be an “MSC Provider” and that person must be INVOLVED with the Co. 22-Nov-18 Umbrella illustration & discussion document

RISK REDUCTION – The solution “LTD with Salary only ” Exemption – IF ONLY PROVIDING LEGAL & ACCOUNTANCY SERVICES Professionally Qualified IR35 Tests PAYE AMOUNT – If no dividends are taken and only PAYE amount less legitimate expenses then it cannot be an MSC 22-Nov-18 Umbrella illustration & discussion document

SOLUTIONS SDC Contracts Requires full review throughout contractual chain – Difficult Multi site one end client Contracts and Practices Carefully written contracts in chain – One engagement , multiple work sites Worker Declarations/Agency Declaration Worker sign up process Expense portal and guidelines - Mileage only, Year end other expenses P87 Audits PSCs IR35 Genuine Accountants MSC Legislation 22-Nov-18 Umbrella illustration & discussion document

NMILL SOLUTIONS Umbrella Expenses Multisite/SDC Employed £5, £15, £25 Umbrella Uplift No Expenses £ 9.99 CFS Mutisite/SDC Self Employed 8% Capped £25 CFS Uplift £7.99 Limited IR35/MSC £95 plus Vat /mth Limited Lite £25/week plus VAT 22-Nov-18 Umbrella illustration & discussion document

Employed versus Self Employed Employment Liability Employment Liability Removed AWR Outside AWR Minimum Wage & Expenses Restriction N/A Pensions Holiday Pay Other Statutory Costs 22-Nov-18 Umbrella illustration & discussion document

Limited Lite Contractual Chain & Funds Flow Agency Commercial Contract for the provision of worker services NMCFS invoices agency services NMCFS Contract for Service – IR35 Over-arching contract of employment or Paye Contract For Service – subject to expense rules PSC invoices NMCFS for worker services, PSC instructs permission to make payments into NMill ACCA client Acct as their professional adviser PSC engages NM as a firm of ACCA accountants PSC’s Umbrella/CFS Funds transferred NMILL Accounting – ACCA Client Acct NM Invoice the PSC for accounting services

Risk Reality Intermediaries fold Workers don’t get paid Reputational issues Debt transfers up the chain Finance Officer Obligations and personal liability Directors personal liability in MSC 22-Nov-18

Questionable Models Multiple Directors in a PSC - TAAR 6/4/2016 - VAT Group Risks, MSC Risk Fixed Expense Umbrella – .  It should be noted that this particular model has been ‘created’ due to HMRC’s redefinition of ‘salary sacrifice arrangements’ (discussed in our last newsletter).  This is not the same legislation as the travel and subsistence proposal (s339A).   Therefore is there is SDC (or the right) and it is not a multi-site end client then t & s cannot be paid regardless of whether the expenses are fixed or not. 22-Nov-18

How to minimize risk? Beware of meaningless Indemnities Approved Supplier List – ACCA/ACAEW practicing certificate & 51% voting rights on technical matters - IR35 Qualified IPSE - Contract Reviews - Director background checks - Scripts - Pheonix companies - Portals - Retainer with agency specialist lawyers - Top 4 sign off - Recorded calls Approved Models – Independent review Audit – Paper work review Mystery Shopping OIL (Onshore Intermediaries Legislation) Systems mandated controls; Approved suppliers only on drop down lists IR35 declarations Chartered Accountants membership number Beware of meaningless Indemnities 22-Nov-18