Tribunal holds recruiter to account for temps’ tax bill
11 Apr 2014 03:08 PM
One of the UK’s largest employment
agencies, Reed, has been found liable for up to £158 million of unpaid
tax due on the salaries of thousands of temporary workers it employed, known as
“employed temps”.
The Upper Tribunal has backed an earlier judgment which found that
Pay As You Earn (PAYE) and National Insurance Contributions (NICs) should have
been paid on the entirety of Reed’s employed temps’ salaries
between 1998 and 2006. The potential total includes interest on the tax
and NICs due.
Over the eight year period, Reed described part of the
salary earned by its employed temps as expenses for travel to work that were
paid without making deductions
for PAYE and NICs.
Reed had argued that, because HM Revenue and Customs
(HMRC) originally allowed these arrangements, the employer could not now be
expected to pay any PAYE and NICs due on the expense
reimbursements.
However, the Upper Tribunal has now endorsed an
earlier First-tier Tribunal
judgment which found that the expense payments were part of the
employed temps’ ordinary salary payments and, as
such, PAYE and NICswere due on them. It also found that,
when HMRC originally considered Reed’s arrangements, it had not
been given a full picture by the company of how they worked.
Ruth Owen, Director General Personal Tax, HMRC,
said:
This case shows that HMRC is determined to
ensure everyone pays their fair share of tax to fund vital public
services.
The
department has used every method at its disposal to secure the tax due, and its
position on the case has now been backed by two courts.