Reed aimed to make non-taxable payments to its employed temps for travel expenses with tax and National Insurance Contributions (NICs) savings being shared between Reed and the employed temp. The Court of Appeal agreed with HMRC’s argument that the payments were made as part of overall wages and, as a result, should have been subject to PAYE and NICs. The Court dismissed Reed’s appeal and awarded HMRC costs.
Ruth Owen, Director General of Personal Tax, said:
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, and that we won’t hesitate to litigate cases if necessary to secure the tax due.
The appeal followed the Upper Tribunal decision in April 2014.