The Association of Recruitment Consultancies (ARC) has warned that HMRC proposals to scrap travel and subsistence tax relief for all agency workers engaged by intermediaries on overarching contracts (OACs) could endanger the UK’s temporary/contracting workforce.

The ARC acknowledged that unscrupulous operators had taken existing tax rules to the limit and beyond; however, fully-complaint Umbrella Companies could be adversely impacted by such a blanket approach. Scrapping home-to-work travel tax relief, the ARC believes, would be unfair to Umbrella Company employees prepared to make long journeys and forego the regularity of salaried income to be as flexible as possible for UK businesses.

Traditional employees, the ARC argues, are in a far better position to factor in travel costs to a regular place of work when negotiating their salaries than freelancing agency workers.

Such freelancers thereby place themselves at a disadvantage to regular employees by eschewing work security in favour of flexibility – an approach the ARC argues has been a mainstay for the UK’s economic recovery. The provision of tax relief on travel expenses should be available to all agency workers, the ARC believes, whether employed or otherwise.

In statement, the organisation said: “The positives are worth having – help individuals to be flexible, continue to distinguish agency work from direct hire work, end the need for OACs thus saving HMRC much administrative cost, and importantly support the recruitment supply industry. Umbrella companies could turn their skills to payroll rather than what HMRC perceives as tax avoidance, and retain many of their staff who under current proposals may all lose their jobs.”

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