A note from HM Revenue & Customs (HMRC) further outlining its position on travel and subsistence schemes is “another nail in the coffin of ‘pay day by pay day’ schemes”, Andy Hogarth (left), chief executive and chair of staffing firm Staffline tells Recruiter.

Controversy and legal wranglings over such schemes has been running for years. The arrangement means tax-free travel and subsistence expenses payments are made to workers as a benefit outside their actual wage, allowing employers to claim back tax relief, which is then not paid back to the worker in full as it should be.

A previous note from HMRC in July 2011 says that in the view of HMRC, “the granting of tax and National Insurance ‘relief’ by an employer each pay day is not compliant with tax and Social Security legislation”.

A new note, posted last week (29 August), acts as a “strengthening of their [HMRC’s] position”, Hogarth says. The note reads: “Expenses that are not made to or provided for any employees by the employer cannot be included in, or afforded the protection of, a dispensation [tax relief].”

“This one I think goes quite a lot further in setting out their views,” adds Hogarth, although he also says that despite the extra clarity, he is “sure” it will be tested in court. “One hears rumours that there’s various actions being taken in the background,” he says.

Hogarth had also previously told recruiter.co.uk that he believed there had been a rise in such payments over the last year.

Comments

Stephen Warlington, 3 Sep 2012, 13:23:

• I wonder if Mr Hogarth would be so kind as to explain if his business has applied previously for such a dispensation, and if so why he has changed his opinion so drastically?