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ARC comment on government response to employment intermediaries and relief for travel and subsistence

ARC has released the following statement after the government’s response to employment intermediaries and relief for travel and subsistence:

 

The government has stated in its response to the consultation on travel and subsistence tax relief that it considers the measures will not have an impact on the flexible workforce or rather that such a fear has yet to be demonstrated.  This is missing the bigger picture.

 

As Adrian Marlowe, the chairman of the Association of Recruitment Consultancies, explained, “I wonder whether a great opportunity to move forwards in several areas has been lost as the scrapping of this kind of tax relief on its own is a negative approach. The government could have chosen to cap rather than scrap expenses, and could have imposed other kinds of limits that would still encourage flexibility and support agency workers.”

 

The consultation also goes on to suggest that market forces will adjust to accommodate the potential demand for increased pay for services and that this is part of the higher wage economy it sought. Whilst this may be the case in certain sectors there will always need to be negotiations. In some sectors this will be difficult, for example public sectors such as education and the NHS (which recently adopted caps on rates for agency contractors and workers).

 

As Marlowe added, “The National Association of Head Teachers reported only a few days ago that 79% of schools face difficulties with recruiting staff, or failed to recruit at all due to the high cost of living and with rates falling behind comparable professions. Against this, it makes no sense at all to push up the cost for agency workers. Where will the money come from? How can market forces really play a part if flexibility is to be retained?

 

The ARC questions whether taking the risk of affecting flexibility is really worth it when other less risky options are available which could have a far better potential outcome. Marlowe said, “The government could have carved out sectors that need more support where jobs and flexibility could more obviously be lost. It could also have refined the ‘SDC as to the manner’ test which, contrary to government claims, is not supported by any proper case precedents so leaving businesses confused. It is also disappointing that the outcome will inevitably hit the lowest paid the hardest.”

 

Marlowe concluded, “What we all want surely for the staffing supply industry is a long lasting reliable resource, offering real flexibility yet free of the scourge of continuous claims of abuse and tax avoidance. I don’t believe this measure will achieve that result, but the option is still there for change.”

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