Payroll parasites: how bosses line their pockets using workers' tax ...

ARE you a temporary worker? After reading this, you should check your last payslip because you might be losing out on your hard-earned tax breaks.

Under special rules, temps don't have to pay tax on the money that they spend on travel and food.

They can claim this tax back at the year end, though in many cases firms do it for them. Trouble is, their bosses often end up pocketing the lion's share, leaving workers barely better off.

This week we expose this vast parasitic industry which is draining up to ?650million a year from the taxpayer off the back of up to 240,000 of the lowest-paid agency workers.

Legitas boss David Allen

The payslip mystified Ewa Pulik. She worked for the minimum wage in warehouses for firms such as John Lewis through an agency and in one week she earned ?327.

Yet according to her payslip she spent ?175 - over half her wages - on food and travelling. "I never told them I had these expenses," said Ewa, 34, from Hitchin, Herts. "I never sent them a single receipt."

After all, what worker earning the minimum wage would spend ?175 on expenses?

Ewa was paid through a third party company, Legal E, one of a new breed of firms that have sprung up to manage the payrolls of other businesses.

Legal E is part of the giant Legitas Group, which turns over ?230million and has 20,000 agency workers on its books.

Its boss is David Allen, 58, from Watford, Herts, who in 2000 was struck off as a solicitor for "using clients' money to keep his firm going."

A Solicitors Disciplinary Tribunal said: "The only proper order was the ultimate sanction."

So why was Legal E claiming these expenses on Ewa's behalf?

The answer is that tax on these expenses could be reclaimed and the bulk went to Legal E and Ewa's agency.

That week, the agency got ?53.37, Legal E got ?11.92 and Ewa made ?23.12. She's not the only loser - in one sense all of us are, because this money is lost to the taxman.

We have seen a ?presentation from Legitas's latest outfit, Employ E, explaining that the workers could get just 9% of the benefit and that, if everyone on their books was paid the same amount, it could be costing the taxpayer ?48million a year.

HM Revenue and Customs has said that this kind of scheme operated by Legitas does not comply with regulations and Ewa, not Legitas, should be reclaiming any tax owed.

But Legitas insists that its lawyers tell it otherwise. A spokeswoman said that it bases the expenses claims on the figures provided by clients.

"We are very reliant on the accuracy of the ?information supplied to us," she said.

"Errors have been made in the past and as a result we recently put in place a rigorous internal auditing system."

We'd like to tell you exactly how much Legitas is making out of this. But its subsidiary, Work Legal E Ltd, is being wound up and the accounts are almost a year overdue.

But it's fair to say that David Allen is doing well. He's laird of the manor after buying a ?1million mansion in the ?Scottish borders, complete with its own golf course.

Source: http://blogs.mirror.co.uk/investigations/2012/10/payroll-parasites-how-bosses-l.html

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