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Warning regarding some recruitment agencies using travel and subsistence schemes for low paid workers.

A recent investigation on Radio 5 live exposed some employment businesses using Travel and Subsistence schemes as a tax loop hole.
Travel and subsistence payments can be made perfectly legitimately were the worker is genuinely incurring costs for travelling to different places of work and receipts are produced as evidence. The problem lies where the scheme is not used for the purposes it was originally intended.  The main concerns are where low paid temporary workers are encouraged to join a scheme that is not relevant to them and doesn’t benefit them in any way, in fact they could be faced with a huge tax bill at the end of the day.  According to the report, these agencies are playing roulette with temps taxes to either increase their own margins or drive down costs to compete for business.  Payment is made through an umbrella or payroll company which in some cases is also owned by the employment business.  Low paid workers who live round the corner from their workplace and take sandwiches to work should not be included in this kind of scheme and are unlikely to be able to produce the relevant receipts required by the HMRC.
Most employers are trying to drive down costs and some of these deals may seem too good to be true, but on closer investigation they could be potentially dangerous both from an HMRC point of view,  if they consider the agency worker has been misled and damaging to an employer’s desire to be seen as an ‘employer of choice’.
Kevin Green from the Recruitment & Employment Confederation -the recruitment industry’s  governing body - was also interviewed on the 5 live programme and explained that they are in contact with the HMRC and have told them that they are very unhappy with the way schemes are being operated and pointed out that it is up to the HMRC to resolve and enforce this issue.
The Low Income Tax Reform Group also commented in a recent article, "We have little doubt that schemes which misrepresent the nature of the employment, or exaggerate the travel expenses incurred, exploit workers by putting them at serious risk of investigative action not only by HMRC but also the DWP."
For further information contact Louise Hewett –

Louise Hewett

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