News

Some low-paid temporary workers are at risk of being chased for unpaid taxes by HMRC, according to an investigation carried out by BBC 5 Live.

The investigation found that some employers have complex arrangements in place for temporary workers’ expenses and it is suspected that these arrangements have been set up for the sole purpose of evading tax. 

 

Tax legislation states that agency workers and the companies employing them do not need to pay national insurance on the money they receive to cover legitimate travel and subsistence costs. According to HMRC guidelines, legitimate costs are expenses that are incurred ‘wholly, exclusively and necessarily’ in the performance of a worker’s business duties.

However, HMRC is concerned that there are some agencies and umbrella companies (companies that act as employers to independent contractors working under temporary contracts) that are paying staff for spurious expenses in order to avoid paying national insurance contributions.

Izabella (not her real name), who works as a picker in a warehouse, told 5 Live that despite never spending more than £40 per week on travel and food, she is regularly getting paid more than double that amount in expenses.

 

According to 5 Live, the lion’s share of such a tax saving is often pocketed by the agency or umbrella company.

 

Campaigners, who describe this practice as ‘abusive tax avoidance’, say that workers involved in such schemes are exploited by being put at risk of being chased for unpaid taxes by HMRC.

 

A spokesperson for HMRC told the BBC: ‘HMRC will always pursue the employer for any underpaid tax and national insurance when we find evidence of abuse.

 

‘Where the employer cannot be found, we consider the case on its own merits, but would not generally hold an employee liable for the tax where evidence showed the employee had been misled by the employer.’

 

 

 

Foremans LLP supports and advises Foremans (UK) Ltd, one of the most compliant Umbrella companies in the market. Employees of Foremans (UK) can rest assured that they are using an umbrella solution that is fully compliant with UK tax legislation.

 

 

However, clients with questions or concerns about expenses or their payslips should not hesitate to contact us for free initial advice.

 

 

Why not also download Foremans (UK) Ltd's Free Guide to Expenses to see what you are really entitled to claim under HMRC guidelines?

 

 

If you are a temporary worker interested in increasing your take-home pay by claiming legitimate business expenses through a transparent and trustworthy umbrella service, feel free to call Foremans (UK) for a free, no-obligation consultation.