It relates to Supervision, Direction or Control, or SDC as it is commonly referred to, and has recently become important because of changes to allowable tax expenses introduced by HMRC.
Since 6th April 2016 changes have meant that expenses on travel and subsistence can only be claimed by individuals who are not supervised, directed or controlled (or subject to the right of supervision, direction or control) so establishing the status of contractors has become key, hence all the talk about SDC tests.
It is now important to establish whether a contractor is subject to SDC as it will have an impact on the expenses they are entitled to claim. If an individual is expected to know HOW to do their work and if no-one has the right to tell them HOW to do it then they will probably pass the SDC test.
Individuals who are told HOW to carry out their work or could be told by someone HOW to do their work will fail the SDC test.
Contractors who routinely work through recruitment agencies and change assignments will begin to become familiar with having their status assessed each time they take on a new assignment. This is important and something that workers who are accustomed to claiming expenses for travel to and from a temporary place of work will need to consider when they accept new contracts. The changes could have a significant impact on take home pay for workers who travel a long distance to work but who fail the SDC test.
For those who are not subject to supervision, direction or control they will still be able to claim expenses for travel and subsistence. Essentially not much is changing for these contractors but they will still need to be aware of the SDC test and should check their contracts carefully to ensure they reflect their status.
If you are a contractor with questions about this or a recruiter who would like advice or help then get in touch.
