Recent comments by the Shadow Chancellor, Ed Balls, concerning travel and subsistence claims have come under sharp criticism by the Recruitment and Employment Confederation.

The issue is an important one for thousands of Umbrella Company Employees who regularly (and legitimately) claim travel and subsistence allowances. REC Chief Executive Kevin Green described Mr Balls’ remarks as “unfair generalisations.”

He insisted that the comments were misleading about the recruitment industry, adding that they “cannot go unchallenged.”

Conceding that there were issues to be dealt around the enforcement of the schemes, he pointed out that the dispensations were “perfectly legitimate” in origin. They were, he said, designed to ensure that mobile temporary workers (many of whom work through umbrella services) “weren’t left out of pocket for travel expenses.”

The system has become exceptionally messy, however, Green continued, with much confusion about how decisions to grant the dispensations are made by HMRC, a process he described as “very opaque.”

A few “bad apples” were distorting the market, Green acknowledged, but he insisted that the “vast majority” of recruitment agencies “play by the rules” even while some unscrupulous operators try to undercut them by offering cheap labour to their clients, pushing the boundaries of legality in the process.

The Government, he said, has the power to fix the problem. He went on;

“HMRC need to do more to enforce the current rules and ensure that there is a level playing field for all agencies. Employers should be aware that if a deal looks too good to be true it probably is. They should audit their supply chains to ensure that agencies they are using do not misuse these schemes.”

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