Expenses Consultation

July 2008 

HMRC Consultation 21 July 2008

The Government has today issued a new consultation entitled "Tax relief for travel expenses: temporary workers and overarching employment contracts".

They state:

"Umbrella companies and some employment agencies make use of overarching employment contracts which enable some temporary workers to gain tax relief for travel expenses not available to others working in similar circumstances. There is also evidence of widespread abuse of the travel expenses rules by these structures. Non-compliance and the use of these structures to pay less income tax and national insurance contributions (NICs) lead to a loss to the Exchequer, as well as further problems."

Adrian Learer, in his role as a director of AEMC, met the Treasury earlier this year to discuss these issues and will be at the forefront of consultation and representations that will take place over the next couple of months.

Adrian says:

"It has been apparent for a while that the Government would like to curtail the tax advantages of temporary workers, which they deem to be unfair.

In planIT's opinion the exemption of umbrella companies from the MSC legislation introduced in April 2007, whilst welcome, was an anomaly.

The allowability of travel expenses was addressed in the MSC legislation in respect of personal service companies but left untouched within umbrella companies.

The blatant promotion of tax relief on travel expenses, and apparent abuse of the rules, by the more unscrupulous umbrella providers was unfortunately always going to draw HMRC's attention and subsequent action.

planIT have consistently advocated compliancy and professionalism within the industry  and to the extent that a more compliant and level playing field will be created as a result of this consultation then we welcome it.

However, we need to ensure a joint and reasonable response to Treasury if we are to avoid HMRC imposing a too restrictive regime, and we will be liaising with other respondees accordingly."  

Click here to view the full consultation document.
 
For more information or advice please contact us on 020 7251 8690.