The FCSA's chief executive has reiterated that the government should introduce an approved licence for umbrella companies, to help combat suspicious travel and subsistence claims that contractors make through them, Recruiter reports.
Earlier in the week, consultation closed on the HMRC's proposed changes to the travel and subsistence relief offered to temporary workers. This assessed the use of overarching contracts – by umbrella companies and employment agencies alike – to 'exploit' the tax rules relating to worker expenses.
According to the Freelance and Contractor Services Association's (FCSA) chief Julia Kermode, removing the tax relief for travel and subsistence was an unworkable idea; and it would be more preferable for the HMRC to take greater action "with compliance on the more spurious travel expenses being claimed through less compliant umbrella firms, which we think is creating the problem."
"Anecdotally, we have heard of workers being encouraged to claim mileage expenses that they're not always incurring in order to top up their income," she added.
In light of Channel 4's recent exposure of tax-avoidance among some employment agencies and umbrella companies, the FCSA is reinstating its case for a government-approved licence, using its own already-existing code of conduct as a guide. This could act as useful assurance, as those with a licence would be proven to be compliant.
"We have our code of conduct. We have been self-regulating for a number of years so that could form part of the solution, but it might be there are some elements of the code HMRC wants to use and some elements of other existing organisations they would want to use," Kermode explained.