HMRC beats Reed in £158m temps' tax case

Three Court of Appeal judges have dealt recruiter Reed its third successive defeat in trying to throw out a £158million tax bill for the travel and subsistence expenses of 500,000 temps.

Told that Reed attempted tax-free payments for expenses with PAYE and NIC savings for itself and the employed temps, the judges ruled that the payments were actually part of the temps’ wages.

The payments, as a result, should have been subject to PAYE and NICs during the two periods that Reed made them, between 1998 and 2002, and between 2002 and 2006.

Having determined this single issue, the three other grounds for Reed’s appeal “fell away,” prompting the judges to both dismiss the appeal and award costs to HM Revenue & Customs.

“We are extremely disappointed by the decision of the Court of Appeal in this case,” a spokesman for Reed said yesterday to ContractorUK.

“This is a historical tax dispute…and will not have an impact on our clients or our temporary employees past and present. We will be working with HMRC to take the matter forward.”

The latter comment suggests that Reed will not appeal the decision which, for being in HMRC’s favour, is in line with the two previous rulings in the case, in 2014 and 2012.

Ruth Owen, director general of personal tax at HMRC, yesterday said that the tax authority “won’t hesitate to litigate cases if necessary to secure the tax due.” Of the ruling, she added:

“This shows that we were right to challenge the complex arrangements that Reed used to try to reduce their Income Tax and National Insurance liabilities.”

Editor’s Note: Related Reading –

What Reed’s expenses defeat means for temps