Government announces yet more measures – this time

The Government has today issued a new consultation – entitled “Tax
relief for travel expenses: temporary workers and overarching employment
contracts”. This marks the beginning of another phase in the
government’s review of the agency sector.

Clearly the principle,
that agency workers are able, by operating through an umbrella company
or agency, in either case using an overarching employment contract, to
claim tax relief against travel expenses, is one that the Government
would like to end. The principle is said to have been abused by both
agencies and umbrellas with the consequence that the Exchequer has lost
money. In addition it is argued that eligibility for tax relief for
travel to and from work, which regular employees cannot set off against
tax, gives agency workers an unfair advantage.

However the
Government indicates a need to balance a curtailment of the relief
against the possibility that its removal could damage flexibility of the

Finally the consultation also considers whether
there is other unfairness arising from the use of over arching
employment contracts in the agency sector.

With responses due by
13th October 2008, this issue should be carefully addressed within the
context of other measures the Government already has in place, e.g. the
MSC legislation, and are in the pipeline, e.g. extension of comparable
rights to agency workers.

There is no doubt that any agency that
supplies limited company contractors should be interested. Umbrella
companies should also be concerned since, in the absence of expenses
allowances, their very existence may be affected. Most readers will no
doubt consider that the Government’s announcement of this measure is
profoundly disappointing given that the sector is already under pressure
from many quarters.

Lawspeed will be advising the umbrella trade body, the AEMC, and offers advice and representation to any other party affected.

more information, assistance and/or advice on representation, please
call Ravi Murphy or Lianne Carter on 01273 236236 or email to
[email protected] quoting reference “expenses consultation”.

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