A recent news article by Recruitment International describing HMRC’s crackdown on the misuse of travel and subsistence claims by some Umbrella Companies has prompted the Umbrella Service i4 Group to correct a potentially misleading statement in the piece.

The clarification comes after Legitas was forced to suspend its travel and subsistence model after an HMRC audit raised concerns that the scheme was not Revenue-compliant. As a result, Legitas immediately began processing all temporary workers on a PAYE basis.

Legitimate expenses policies have been underpinned by dispensations from HMRC confirming that certain employee expenses are not subject to PAYE; however, the Revenue has toughened its criteria for dispensations over the last year and now requires much higher levels of compliance and exceptionally robust procedures to ensure that only legitimate expenses are processed. Legitas was found wanting and may face an enormous tax bill as a result. Badly-run schemes threaten to tarnish entirely compliant Umbrella Companies through adverse publicity.

Recruitment International’s original report indicated that i4 Group had also been issued with a letter of debt transfer by HMRC and was now involved in a legal appeal. The company’s director, Nick Stevenson, said: “i4 Pay Partners Limited, our Umbrella Company, has NOT received any correspondence whatsoever from HMRC regarding debt transfer. In fact, within the last six weeks, i4 Pay Partners has successfully completed a full PAYE and expenses audit by HMRC with the comments made by the inspectors that ‘the company was one of the best run Umbrella Companies they have audited in the last 18 months’. i4 Pay Partners is, and always has been, fully compliant with all HMRC and employer regulations.”

It is not clear from these statements whether this brings the saga with Costelloe Business Services to an end, or whether its relationship with i4 is being discussed. In any case, it appears clear that a transfer of debt notice would potentially affect the directors of any company in the chain.

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