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UK economy will suffer says FCSA as T&S cuts go ahead

The Freelancer & Contractor Services Association (FCSA) – the UK’s leading independent trade body for umbrella employers and accountancy service providers supporting the flexible workforce – today expressed its disappointment that the Government has not listened to the widespread warnings issued by the industry and has pressed ahead with its plans to cut travel and subsistence expenses for contractors.

Today’s announcement will have a significant impact on the UK economy in both the private and public sector; FCSA has identified that 47% of supply teachers, 90% of social workers, 89% of shift doctors, 94% of locum doctors and 88% of allied health professionals will be impacted by cuts to contractors expenses.

HMRC’s draft legislation is based around the application of Supervision, Direction or Control (SDC) to establish if a worker is eligible for T&S tax relief but, in reality, the test is vague and unworkable.

FCSA data also shows that almost 50% of contractors do not claim the travel and subsistence expenses that they are due which dispels one of the arguments that expenses are systemically exploited; in fact, expenses are only claimed as necessary due to cost and distances travelled in order to make an assignment viable.

Reacting to the announcement, Julia Kermode, CEO of the FCSA said: “Today’s announcement is disappointing and there is no question that we will see a skills shortage as fewer workers will be willing to travel for assignments.  There will undoubtedly be a knock on effect and Government policies that are heavily reliant on contractors will be hit – the Northern Powerhouse will suffer along with other infrastructure projects which rely on contractors.  The nuclear industry will also miss out along with the public sector.

“The Government is determined to penalise the flexible workforce on which it relies to help grow and develop the UK economy.  It makes no sense, but we will work with recruiters and end-clients to ensure its effective implementation in the best interests of the supply chain and the workforce as a damage limitation process. We did it in 2014 when the Onshore Intermediaries legislation came into force and we can do so again for T&S.”