Tax-avoiding recruiters scam HMRC and workers

The UK’s temporary recruitment industry is so awash with tax “avoidance” that it permits agencies to exploit millions of workers and defraud the taxpayer out of millions of pounds.

That’s the claim from Andy Hogarth, chief executive of recruitment firm Staffline, which supplies temporary workers to companies such as Tesco and DHL. He said many temp agencies run unlawful expenses schemes that see them bank claimable tax relief as profits rather than passing it on to their staff.

He estimates around 50,000 people out of the UK’s 1.5m pool of temporary workers are believed to be affected. This in turn costs the taxman an average of £30 per worker each week – or an estimated £390m a year.

Despite HMRC publishing guidance on the issue last year, Hogarth says hundreds of recruitment firms continue to breach the rules.

In an interview with the Sunday Telegraph, Hogarth said: ‘This is a very real issue for the recruitment industry and is not going to go away unless the government stops travel and subsistence scheme operators ripping off workers they place.

‘Other industry captains point out that the practice also rips off the Exchequer at a time of lower tax revenue growth than expected, while putting those recruiters who operate expenses compliantly (and who don’t operate the schemes), at a commercial disadvantage.’

HMRC says it will investigate any recruitment agency it suspects of breaching regulations. Get the latest news in your inbox. Sign up to receive the Accountancy Live e-newsletter, HERE

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