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The Government should combat tax abuses of employee travel rules by tightening up compliance using existing legislation, according to the ICAEW Tax Faculty.
It has opposed 'making yet more new rules such as those proposed' in the consultation document Tax Relief for Travelling Expenses: Temporary Workers and Overarching Employment Contracts.
In its response to the HMRC paper, the Tax Faculty warns that the introduction of new laws 'would merely replace one set of anomalies with another and would probably be open to circumvention'.
Such a move 'may impact on innocent targets, such as professional firms who employ staff through service companies, outsourcing businesses and employers with staff on secondment,' added the organisation.
The consultation document contains plans to counter the perceived abuse of tax rules for employee travel expenses where umbrella companies and some employment agencies make use of 'overarching' employment contracts.
The Tax Faculty stated the belief that 'in a number of cases the nature of the contract - as an overarching contract of employment - could be open to challenge'.
It went on to suggest that 'improvements in the way that HMRC polices the grant and operation of dispensations could resolve much of the concern.
'HMRC has to be satisfied that no tax will be due on the expenses paid before it grants a dispensation, and it has the power to revoke the same.
'It could attach conditions to dispensations, which need not be onerous and are likely to be less so than compiling forms P11D.'
