Deloitte tax partner Brian White is calling on HM Revenue & Customs to scrutinise travel and subsistence schemes for temporary workers and “stamp out those that are not operating within the law”.

Speaking exclusively to Recruiter, White, who advises a number of recruitment companies, was commenting on the recent guidance issued by HMRC for companies that employ temporary workers on tax, national insurance and minimum wage legislation. (See link on right ‘The good, the bad and the ugly’ in our Expert Advice section on recruiter.co.uk)

HMRC believes there are some businesses, particularly recruitment businesses, whose arrangements contravene or fail to comply with the legislation and exploit workers. It is looking to take action against such companies.

“The onus should be on HMRC to undertake a detailed review of all schemes and stamp out those that are not operating within the law. This was its own conclusion when it reviewed the law in this area in 2008 and concluded that no changes were required,” White says.

Such action would be welcomed by companies operating legitimate schemes, White says but adds “there is a real danger that in the process all schemes…will be tarred with the same brush”.

In a 10 August Financial Times article, Staffline managing director Andy Hogarth was quoted as saying he faced unfair competition from recruiters who abused tax law to undercut rates by as much £1 an hour. “We are losing clients to people illegally offering less than the minimum wage,” Hogarth said.

White hit back at Hogarth’s remarks, saying that the Staffline MD “may face unfair competition from recruiters who abuse the system, but he faces entirely fair competition from other organisations whose schemes comply with the legislation in every respect”.

If HMRC undertakes a review, White says, “an end user could very easily determine whether suppliers are operating legitimate arrangements by requesting sight of the relevant HMRC dispensation, which HMRC would withdraw from any business it found to be acting illegally”.