There is to be a crackdown on gangmasters and umbrella companies who flout rules and abuse tax free allowances to appear cheaper than their legitimate rivals. This is being pursued by the Gangmasters Licensing Authority (GLA), which was formed to protect workers from exploitation in horticultural, agricultural, shellfish gathering and associated industries.

The GLA has now issued guidance to all relevant businesses with a twelve-week warning. Once this period is up, on 17th February 2010, they will start to take action. If non-compliance is proven, details will be passed to HMRC to reclaim tax arrears alongside national insurance. Anyone found to have been breaking the rules can also expect to pay a large penalty.

Chairman of the Gangmaster Licensing Authority, Paul Whitehouse, said: “We have issued clear guidance and this industry has been given 12 weeks to ensure they comply. There are no excuses and we will come down hard on anyone who is operating illegal schemes from February 17 2010.

The GLA stated that the schemes they are looking into are often touted as travel schemes or travel and subsistence schemes. Often, agencies or umbrella companies who are bending the rules inform their members that these schemes are compulsory for anyone earning minimum wage. Often the expended paid have not actually been incurred and are purely a means of reducing taxable income. GLA believe more and more companies are using such schemes purely to benefit their own finances.

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