As pressure on those operating travel & subsistence expenses schemes for lower-paid workers continues to rise, payroll and accounting services firm Backoffice has withdrawn from the market its umbrella product Pay Day, operated through its subsidiary Paymaster.

This follows the news last Friday [23 November] that a group of MPs had produced an Early Day Motion calling for action in the 5 December Autumn Statement on the schemes run by some temporary labour providers, and an earlier decision by a judge not to grant a licence to one company, FS Commercial, proposing such a scheme.

That judgement, backing up a decision made by the Gangmasters Licensing Authority, had been hailed as the beginning of further crackdown on such schemes.

Indeed, in a letter to clients sent by Paymaster managing director Roger Mason, obtained by Recruiter, it said that in the light of recent events, “schemes that have a tax relief-related solution for workers on or close to NMW [national minimum wage] can now be construed as non-compliant and we are therefore compelled to withdraw Paymaster Ltd from the Umbrella market”.

Specifically, it listed the FS Commercial judgement, the fact that the so-called Cordant Case is now being used by HMRC “as the foundation or basis for their thinking” on the matter” and a third case in which a scheme had previously been accepted and now being challenged, as reasons it was to withdraw its offering.

An email informing of the withdrawal of Pay Day was circulated on 23 November, although the scheme was made unavailable as of 19 November. Backoffice tells Recruiter: “The company is not releasing any statement on this at this time.”

The letter also clarified that it continues “to offer a Classic Umbrella for higher paid workers and we run a PAYE payroll, Sole Trader and CIS Schemes through Backoffice Ltd, Backoffice Construction Ltd and Backoffice Pay Ltd”.

• What does the future hold for these schemes and what are you planning to do in response? Let us know at [email protected]