Recruiters Under The Spotlight

31 July 2012

The latest tax avoidance area to come under the spotlight is the temporary recruitment industry where it is claimed that agencies exploit millions of workers and defraud the taxpayer out of millions of pounds.

Andy Hogarth, chief executive of recruitment firm Staffline, which supplies temporary workers to companies such as Tesco and DHL, claims that hundreds of recruiters 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 1.5 million pool of temporary workers are believed to be affected. This in turn costs the taxman an average of £30 per worker each week – or some £390 million a year.

In his 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.’

The Sunday Telegraph has seen pay slips that many recruiters are using to run the expenses schemes, allowing them to bank the tax relief they are claiming back from HMRC without passing on the worker’s true amount. HMRC has vowed investigate any recruitment agency it suspects of breaching regulations.

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