The Treasury is considering reversing a concession for travel expenses which it introduced in 1998, for temporary workers travelling to temporary work places,. Currently some employment agencies and other intermediary companies are exploiting a loophole in the tax system which has resulted in significant losses for the Treasury. Most temps cannot claim tax relief because they are on short term contracts where each assignment involves a separate, and therefore permanent, place of work. The loophole involves using an “overarching employment contract” between intermediaries and workers, whereby separate assignments for temporary workers are described as a single employment, making each workplace temporary. Consequently the employee is entitled to tax relief, although pay rates are often adjusted so that the employer rather than the employee receives the benefit of the relief. Critics say that the system allowed unscrupulous agencies to exploit employees, encouraging them to claim expenses that were not genuinely incurred. The Treasury has said that it will weigh the advantages of flexibility in the workforce against any unfairness resulting from its “casualisation”.
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