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Glue between temp assignments necessary for contractors to claim legitimate business expenses

In the recent High Court decision in HMRC versus Reed 2014, one of the principal issues from the case found that for a temporary worker’s sequential assignments to meet the requirements for continuous employment – allowing them to claim for work related expenses such as travel and subsistence – there needs to be sufficient mutuality of obligations (MOO).

In a contract between an umbrella employer and the employee, the mutuality of obligations between projects is the & lsquo;glue’ that holds the assignments together to create the overarching employment and is therefore the key to allowing tax relief on travel and subsistence expenses.

Without this in place, there is a risk that the individual assignments can be treated as separate employments and, as such, there is no qualification for the employee to receive expenses such as travel and subsistence free of tax and NIC. 

Matthew Brown, Managing Director of giant, commented, “At giant, we have worked hard to constantly strengthen our employment offering by including wide-ranging mutual obligations between ourselves and our employees, in particularly between assignments.   In addition to statutory payments, guaranteed hours, completion of timesheets and employee assignment hunting obligations, we were the first to offer Gap Pay a retainer payment between assignments (on AWR Regulation 5 match permanent pay employment, not to be confused with AWR Regulation 10 pay between assignment).”


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