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Tribunal holds recruiter to account for temps’ tax bill

Press release -

Tribunal holds recruiter to account for temps’ tax bill

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 NICs were 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.”

Notes for Editors

  1. The Upper Tribunal ruling in Reed Employment Plc & Others vs HMRC can be found at http://www.tribunals.gov.uk/financeandtax/Documents/Reed_Employment_Plc_and_others_v_HMRC.pdf
  2. The 6 January 2012 First-tier Tribunal ruling can be found at http://www.bailii.org/uk/cases/UKFTT/TC/2012/TC01727.html
  3. Between 1998 and 2006, Reed described part of the income earned by and paid to employed temps as expenses to cover the cost of travel to work and the cost of refreshments consumed at work. Reed argued that the employed temps were entitled to tax relief in relation to the costs of travel and refreshments and implemented arrangements under which the relevant amounts were paid without deduction of tax under PAYE and NICs. 
  4. Follow HMRC on Twitter @HMRCgovUK


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HM Revenue & Customs (HMRC) is the UK’s tax authority.

HMRC is responsible for making sure that the money is available to fund the UK’s public services and for helping families and individuals with targeted financial support.

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HM Revenue & Customs (HMRC) is the UK’s tax authority

HMRC is responsible for making sure that the money is available to fund the UK’s public services and for helping families and individuals with targeted financial support.

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