Contractor Expenses and “Supervision, Direction and Control”

03/20/2015 - 10:17

Budget 2015 confirmed that a review of contractors expenses and in particular travel & subsistence would take place in the summer of 2015 with potential changes being made for the tax year commencing 6th April 2016. It proposes that Supervision, Direction and Control (SDC) will be the key factors in deciding whether a contractor is genuinely a self-employed or should in fact be treated as an employee of the end client where they are working.

Importantly the budget includes the word “and” rather than “or” in talking about the 3 conditions for self-employment. This would imply all 3 have to exist before expenses are excluded. False Self Employment Legislation used the term “or” in its legislation implying that only one had to exist.

What does Supervision, Direction and Control Mean?

HMRC produced a useful document giving typical examples and definitions in response to its Agency Legislation:

Supervision is someone overseeing a person doing work, to ensure that person is doing the work they are required to do and it is being done correctly to the required standard. Supervision can also involve helping the person where appropriate in order to develop their skills and knowledge.

Direction is someone making a person do is/her work in a certain way by providing them with instructions, guidance or advice as to how the work must be done. Someone providing direction will often coordinate the how the work is done, as it is being undertaken.

Control is someone dictating what work a person does and how they go about doing that work. Control also includes someone having the power to move the person from one job to another.

The typical examples show scenarios how SDC conditions can be interpreted for the following professions: IT Consultant, Professional Chef, HGV Driver, Joiner/Carpenter, Supermarket Delivery Driver for online orders, Security Officer, Locum Pharmacist, Care Worker, Market Researcher, Operative at a Recycling Plant, Drama Teacher and Product Demonstrator. enables contractors to work through a Contractor Umbrella Company or via their own limited company. For more information please email: or call 0800 121 6513.