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UK – Tax report could affect agency workers

05 September 2013

The Office of Tax Simplification (OTS) published an interim report into employee benefits and expenses. This signals a wholesale review by the government of how expenses and other tax dispensations are dealt with and could impact contractors, agency workers and limited companies, according to the Association of Recruitment Consultancies (ARC).

The Report was published in August 2013 and looks at travel, subsistence, and accommodation benefits. In his foreword the Rt. Hon. Michael Jack, Chairman of the Office of Tax Simplification wrote: “As ever, HMRC’s administration comes up time and time again as a bugbear. The P11D process is a burden for employers. It is widely misunderstood and often leads to incorrect tax codes. Travel and subsistence is the next biggest issue we’ve found. Most people said they didn’t want radical changes; just some tweaks to bring the rules up to date.”

Adrian Marlowe, Chairman of the ARC said: “This will have a bearing upon how Umbrella companies operate going forward. A major review in this area is needed to level the playing field in this highly competitive sector. Recent calls for Umbrella companies to be included in the Agency Conduct Regulation would be difficult to achieve given the nature of those Regulations.”

“However, simplification of the tax system would probably result in removing the risk for agencies relating to the more extravagant tax avoidance schemes currently on offer. Therefore, this review can only be good for agencies, workers and the recruitment industry in the long run,” he added.

The OTS is not making recommendations at this stage and are inviting input into their investigations by mid-September, when they will embark on the next stage of their review. To read the full review, please click here

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