HMRC Cracking Down on Travel & Subsistence Schemes

Press Release taken from Recruitment International. Recruitment International reports that HMRC is stepping up in its campaign to cut down on controversial travel and subsistence schemes. We understand that as well as the widely reported case concerning Legitas, HMRC has also issued letters of debt transfer to the i4 Group and had a significant appeal turned down in its favour.

The rejection of the appeal by Island Contract Management (UK) Ltd by Judge Baker was in respect of ICM UK appealing that HMRC had determined that ICM UK is liable to pay to HMRC sums in aggregate amounting to £42,751,508.78 which HMRC contends should have been deducted from sums paid by ICM UK to sub-contractors.

In the high profile case to hit the national press today It has been reported that Legitas has written to all of its agencies suspending one such scheme.  The letter read: We recently commenced talks with HRMC during which we identified concerns over areas for improvement in relation to the operational practicalities of our current model.

As you might expect as market leader, Legitas has recently been working on the launch of a new and more stringent real time portal. We are therefore currently working with HMRC to set the precise terms of this new model for use across our full client base.

Whilst Legitas and HMRC create and confirm the final terms of the model, in order to best protect both your interests and those of the temp, we have decided to process all temps on a PAYE basis for a short period of time, with immediate effect.

Productive discussions are currently taking place with HMRC and we shall be able to provide further details in due course. We are confident that our new model will provide our valuable clients with a more comprehensive and efficient process for temporary worker payment. We shall, of course, keep you up to date with any further developments as and when they occur. David Allen, Chief Executive Officer.

David Allen was unavailable for comment, however, a statement from the company’s PR company said, “We are currently working with HMRC to set and implement a real time model for the processing of temporary worker payments. Whilst no legal issues have been found with our current model, we are keen to lead the market in employing a more efficient and comprehensive system and have taken guidance from HMRC in doing this. In the meantime, in order to best protect both our clients’ interests and those of the worker, we have decided to process all temporary employees’ payroll on a PAYE basis for a short period of time, with immediate effect.

As the new model has not yet been finalised, we are unable to comment any further on it at this stage. However, we will make a further statement as soon as practicable.”

HMRC in a statement said, “‘Whilst we are unable to comment on specific taxpayers,  HMRC does not help businesses to develop models. In our statements of July 2011 and August 2012 we made clear our views on ‘pay-day’ models.  We continue to stand by these statements and will pursue businesses that do not comply with the rules.’

RI is firmly in the camp that supports any incentive or measure that puts an end to low paid workers being put in a position of peril or exploitation.