HMRC clamps down on bogus expense claims

HM Revenue and Customs (HMRC) looks set to continue its clampdown on non compliant expense claims.

This comes following the release of a brief from HMRC which follows the theme of the July 2008 consultation 'Tax relief for travel expenses: temporary workers and overarching employment contracts.' "The brief revisits a number of concerns identified by the consultation and highlights some key areas that HMRC will be targeting closely from now on. Issues surrounding compliance in general and invalid or wrongly applied expense dispensations will now be subject to a detailed and ongoing investigation by HMRC.

Non-compliant umbrella companies are warned to review their processes and consider making the necessary changes to their practices or face heavy penalties from HMRC.

Martin Hesketh, managing director at specialist accountancy providers, Brookson, welcomed the move. He said:"We fully support HMRC's efforts to create clear and fair rules for professional contractors that drive industry standards on compliance.

Martin Hesketh "The benefits of working via a compliant umbrella provider should not be put at risk by the abuse of current legislation. The announcement is a step in the right direction and we welcome further moves by HMRC to create a level playing field for those companies that have ensured compliance for contractors."

HMRC is working with other Government departments, including the Department for Business Innovation and Skills, and Authorities, particularly the Gangmasters' Licensing Authority, to identify businesses acting in contravention of legislation and will penalise breaches of the law as they are identified.

In addition, HMRC is also working with end users of temporary labour to raise their awareness of the consequences of sourcing their temporary workers from businesses which act in contravention of the law.