Hexagon Services UK - advice needed urgently please

Amanda65

Hiya . My OH is starting a new job next week but the company want to take him on as a tep for the first month, with (if he hopefully does OK) a permanent job at the end of the month.

The agency who found him the placement have recommended Hexagon to him as they offer professional services to contractors. We have received their pack today and it almost seems too good to be true. They sort out your tax and NI for you but you can claim laods back (travelling to and from work, lunches etc etc) and only pay 19% tax!!! My OH normally pays 40%.
He has been sent a form to ssend which willdetail all his expense etc. for the week. They will invoice the agency and pay him each week.

Does this sound right - my naturally suspicious mind is working ovetime. We have paid them £18 for them to sort all this out

molotov_3

You certainly can deduct tax deductible expenses from income (as long as they solely relate to earning income) so deducting travelling expenses etc would seen to be valid.

WHA

There is a world of difference between what your OH can claim directly from the agency for expenses tax free and what are actually tax free.

The dispensation which the agency will hold is for THEIR BENEFIT only, not your OH. It simply means that they can pay your OH the expenses he is claiming from them without bothering about producing receipts etc. I.e. the agency are allowed to accept your OH's expenses claim form as evidence of a valid payment, but the onus of proof stays with your OH that they are valid tax-free expenses.

Don't forget that your OH is solely responsible for his own tax affairs. If the Inland Revenue investigate and he is found to have claimed tax free expenses to which he was not entitled, then your OH gets the tax bill, not the agency. Your OH will only be able to claim tax-free travel and lunches if he is working at a temporary workplace, i.e. not his permanent workplace, e.g. he works at Location A which is his permanent workplace, but they send him to location B for a 2 week secondment - it is only the extra mileage to location B and his meals whilst at location B that are tax free - any other expenses he claims are personally taxable.

Also watch out for them paying him a small salary, made up with dividends if they are running that sort of scheme. Again, it is your OH who is liable to the tax on the dividends his total income goes into the higher rate tax bands - another 25% on the dividends received.

In summary, don't take their word for it. Make your own enquiries with your local HM Revenue & Customs office or an accountant/tax adviser.

Pennywise

I think you'll find that the 2006 budget will stop some of these kind of schemes dead in the water:-

From the Treasury report:

Quote:
5.86 The Government believes that all individuals and businesses must pay their fair share of NICs and tax, irrespective of legal form. It will continue to review the tax and NICs systems to ensure that this is the case and will bring forward proposals for discussion that are consistent with simplicity for compliant businesses, support for businesses in their aspirations to grow and maintaining the attractiveness of the UK as a business location. As the first stage of this review the Government will consult on action to tackle disguised
employment through managed service company schemes.

PS Tax Bulletin 74 said that a managed service company was as follows:

Quote:
Managed Service Companies
Some promoters, as an alternative to the Composite Service Company, offer managed service companies (MSC). The promoter will set up the company, appoint the director(s), company secretary etc and deal with all the administration. The "worker" will normally be an employee and shareholder of the MSC and will be entitled to receive salary, expenses and dividends. The promoter will retain its administration fee and the balance is available to be paid to the worker. Unlike the CSC there is only one "worker" in an MSC. However, as with CSCs, the MSC will have to consider whether the service company legislation applies to individual engagements with clients.

Amanda65

Thanks for the advice. We are treating this very cautiously and it should only be for a month anyway (they have taken him on as a temp for one month with hopefully a permanent job offer at the end of the month if they like him). As I said I am naturally suspicious and would rather pay what we have to pay, even though I realise loads of people seem to 'tax dodge' all sorts!

tiger

Dont Go With Them. I Have A Friend Of Mine With Sort Of Company And It Was Nightmare.she Had To Move To Another Company

Amanda65

Am now panicking as OH has had first 'pay slip' and it has paid him a gross basic income and then a dividend calculation - what do we do now?????

How do we go about declaring this to the tax man and how does he get paid without Hexagons services. The agency who introduced him want to take a cut if the salary is paid through them and as he is the equivalent of £15k per annum down wants to preserve as much of his income as he can for us!

Cook_County

I would suggest consulting with an employment solicitor without delay. It sounds as if he has been misled throughout. He clearly is not an employee of Hexagon but instead the main contractor who provide him with a desk. The commissions do however need to be paid so he should see what he signed.