Five members of Parliament (MPs) have introduced an Early Day Motion calling on the government to take action on tax avoidance through travel and subsistence expenses schemes.
According to the motion, the schemes are often used by temporary labour providers and involve the employer ‘artificially’ classifying part of a worker’s pay as expenses, so saving on tax.
The MPs said that the schemes may not be lawful and could have the potential to reduce a worker’s taxable pay to below the national minimum wage.
The MPs, led by Michael Connarty, Labour MP for Linlithhgow and East Falkirk, have called on the government to investigate organisations that use these expenses schemes to avoid paying tax and commit to possibly amending legislation on these schemes. They also asked for HM Revenue and Customs (HMRC) to be given the power to enforce current legislation.
HMRC has estimated that the cost to the Exchequer of these schemes will be £650 million in 2012-13.