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24 Jul 2008
At least £300m a year in false tax relief claims on expenses is made by the temping industry, the Treasury has claimed.
It is consulting on how to overcome the problem of temporary workers falsely claiming expenses tax relief while working in ‘umbrella company’ structures.
Temps have an overarching employment contract within an umbrella company. This then reaches an agreement with HM Revenue & Customs over what the employees can claim for travel expenses, but the taxman is concerned the system is being abused.
The Treasury believes there are as many as 100,000 temps working in these structures, plus another 225,000 with overarching contracts direct through agencies, estimating the cost of abuse is ‘at least £300m’.
Tax lecturer Anne Redston said the Treasury was wary about unsettling the temporary workforce. ‘We need a flexible labour market, the Treasury knows that is important, but there are a lot of cases where they overclaim expenses relief. One solution is to enforce current rules more rigorously.’
The consultation runs until 13 October.
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The consultation document actually says, at page 38, 'Currently at least £300m is lost through relief for travel expenses being granted to temporary worker in
situations where it would not normally be available.' That is quite different to your report. There is no suggestion that false claims are anywhere near the level you quote and in fact the vast majority are as authorised by HMRC.
Posted by: Andrew, 23 Jul 2008 | 00:00