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UK – Reed loses important tax tribunal

23 January 2012

The recruitment firm Reed, one of the largest temporary agencies in the UK, has lost a 158 million Pounds case with Revenue & Customs over paying for the lunches and daily commutes of its temporary workers. It has come to light that the agency made these payments to about 500,000 temporary staff in an eight-year period from 1998 to 2006. Reed allowed staff to claim 6 Pounds a day for subsistence and up to 11.45 Pounds for commuting.

Although Reed claimed these payments were part of a “salary sacrifice scheme” where lower salaries can be exchanged for certain benefits, a tax tribunal ruled that there was no real agreement to sacrifice salary and Reed had just manipulated salary figures on payslips after the event.

The tribunal judges also ruled that Reed could not reclaim the 158 million Pounds in tax and National Insurance from the temporary workers. Reed is expected to appeal. 

Reed was founded in 1960 and is still family-owned. Founder, Sir Alec Reed CBE was awarded a knighthood for services to business and charity in 2010. The firm is a specialist provider of permanent, contract, temporary and outsourced recruitment solutions, IT and HR consulting.

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