Second Success for the GLA against Illegitimate Travel and Subsistence Schemes

On 4 July 2013 the GLA wrote to UK Payroll Ltd to revoke their licence. The company did not appeal the decision, which took effect on 2 August 2013.

In response to GLA enquiries UK Payroll Ltd, based in Newton le Willows, Merseyside, accepted that they were operating a pay day by pay day expenses relief scheme. This was in breach of GLA and HMRC guidance, and constituted a critical breach of the GLA’s licensing standards, specifically “multiple and serious” breaches of 2.1 regarding the correct payment of PAYE tax and National Insurance contributions, 2.2 on payment of national minimum wage. The company were also found to have breached licence standard 3.3 regarding the withholding of wages (holiday pay).

The Principal Authority, Mr Phillip Capper, was found to be not fit and proper to hold a licence failing licensing standard 1.1 for his “lack of proper co-operation and candour in responding to the GLA” and for the company’s involvement in and profiting from “the making of fraudulent expense claims”. The GLA also found that Mr Capper lacked the level of competence required to hold a GLA licence, and breached licensing standard 1.2.

UK Payroll Ltd was first contacted about the operation of the pay day by pay day model in December 2012. Despite this they continued to operate it until faced with the revocation of their licence.

At that point the company advised that they no longer operated that model. The GLA concluded that, if it had indeed ceased to operate the model, it was only the likely loss of the licence that led the company to that decision. That did not make the company fit to hold a licence. UK Payroll Ltd argued that it was acceptable to operate the model, as larger companies did. The GLA did not, and does not, accept this argument in respect of any licence holder who may operate, or use the services of such schemes.

Following the licence refusal, and successful appeal outcome for the GLA, against FS Commercial Ltd, this is the GLA’s second success in its programme of review of licence holders that may operate such schemes.

Paul Broadbent, CEO, said:

“This company did not appeal against the GLA’s decision to revoke their licence. I take that as a clear signal that they knew it was unethical to operate the pay day by pay day model. The fact that that they only stopped operating the scheme when faced with revocation demonstrates that they were disingenuous in their dealings with the GLA, and out to profit from workers, and to the detriment of the tax payer. It is time for all companies that operate these schemes to ask themselves are they ethical, reasonable and lawful. If not, be fully prepared to lose your licence, forced to pay your workers what they are owed and go out of business.”

The GLA will continue to work with HMRC to robustly challenge those operators, and their advisers, who continue to market and operate these schemes.

A spokesperson for HMRC said:

“We have made the rules on pay day by pay day relief clear in two statements on our website and today's announcement by the GLA shows clearly that ignoring these rules has serious consequences for Labour Providers in addition to tax, National Insurance and the National Minimum Wage.”

ENDS

Press release issued by GLA Communications and Information Officer Paul Fearn. Contact 0115 959 7069 or email communications@gla.gsi.gov.uk.

Notes to Editors

1. The GLA’s licensing standards can be found here

2. The GLA’s guidance on travel and subsistence schemes can be found here

3. HMRC’s guidance can be found at: http://webarchive.nationalarchives.gov.uk/20140109143644/http://www.hmrc.gov.uk/news/news290812.htm

4. The GLA’s press release in FS Commercial can be found here

5. The GLA operates throughout the UK and is a Non Departmental Public Body

6. The authority was formed in 2005 in the wake of the Morecambe Bay cockle picking disaster when 23 Chinese workers drowned on the sands

7. The GLA licences companies that supply labour (gangmasters) to agriculture, horticulture, food processing and packaging, forestry and shellfish gathering

8. Its main strategic priorities are to prevent worker exploitation, protect vulnerable people and tackle unlicensed and criminal activity

9. Under the Gangmasters Licensing Act (2004) it is illegal both to operate as, or employ the services of, an unlicensed gangmaster

10. Nearly 1,200 labour providers are licensed by the GLA.

www.gla.defra.gov.uk