Temporary workers hit by abusive tax avoidance job agancies

Low paid temporary workers are being warned they could be chased for unpaid taxes because of complex arrangements on their expenses drawn up by employers.Temporary workers hit by abusive tax avoidance job aganciesTax rules state that neither the agency worker, nor the company employing them, need pay national insurance on the money they receive to cover costs.

But HM Revenue and Customs (HMRC) is concerned that some agencies are paying staff for spurious expenses.

Campaigners say such schemes exploit workers by putting them at risk of being chased for unpaid taxes and have described the practice as “abusive tax avoidance”.

The answer is that the lion’s share of any tax saving is often taken by the agency and any company to which it subcontracts to manage its payroll – sometimes known as an “umbrella” company.

The agency worker then effectively becomes the payroll company’s employee.

Under the complex tax rules, if the worker moves between different assignments but remains employed by the same company, they can claim tax relief on the expenses covering their travel from home to those different places of work.

But some agency workers have found they are being paid much more to cover the cost of food and travel than they actually spend.

These companies also save money by not having to pay employer’s national insurance contributions on the part of the worker’s income which is paid as expenses.

The charity Tax Aid said it has even seen cases of employees being paid expenses where none are due at all.

“We certainly see cases where employees say, ‘I didn’t have any expenses. I walk to work’,” says the charity’s technical director, Frances Corrie.

“They may tell us that they have a bicycle or they really don’t incur any expenses in getting there.”

November 30, 2012 · Home Based Jobs · Comments Closed
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