Employee expenses do not qualify for tax relief

The taxpayer was an umbrella company. It provided the services of workers which it employed under an overarching or umbrella contract of employment to agencies which then supplied those services to contractors in the construction industry.

The issue was whether the taxpayer employed the individuals on a continuous basis under an overarching contract of employment covering all the assignments undertaken by the individuals or whether there was a series of separate contracts for each individual assignment.

If there was an overarching contract of employment each place of work was a temporary workplace and the individual’s travel and subsistence expenses could be paid tax free. If there was a separate employment contract for each assignment the workplace was in effect a permanent workplace and expenses payments would be subject to PAYE and National Insurance.

HMRC said there was no overarching contract so the expenses payments were taxable. The First-tier...