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Published on 10 February 2015

Employment Intermediaries: Temporary workers – relief for travel and subsistence expenses

Our extensive research in 2014 around umbrella arrangements resulted in a much better understanding of how schemes such as ‘Pay Day by Pay Day’ (PDPD) affect low-income workers. From this perspective, we responded to an HMRC consultation proposing to restrict relief for temporary workers.

Our recent report ‘Travel expenses for the low-paid – a time for a rethink?’ looked closely at umbrella arrangements and in particular the use of schemes by low-paid agency workers.

These schemes are difficult to understand and present various ‘hazards’ such as the possibility of HMRC pursuing the worker rather than their employer for a tax underpayment. In turn, this could lead to contention that the worker has over-claimed tax credits. We therefore recommend that if change is implemented from 6 April 2016, as proposed in this consultation, that HMRC do not pursue workers for liabilities for years up to then that are caused by having unwittingly been caught up in a non-compliant scheme

We also believe that great care should be taken such that there are no unintended consequences of a change in the legislation and we would wish to ensure that there are no adverse effects on mobile workers, such as those in the care industry.

Thought needs to be given to the considerable disincentive to work of travel costs, particularly for temporary workers who may not be able to minimise these by adjusting their housing situation, and how this might be ameliorated by means other than giving tax relief – for example, via the Universal Credit system.

The LITRG response can be found here.

Meredith McCammond

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