HMRC has published a further statement on pay day by pay day tax relief models and dispensations. The statement should be read by all umbrella companies, employment businesses, labour providers and employers engaging and paying temporary workers.

This statement follows on from the first statement in July 2011 on this which set out HMRC's view that the granting of tax and National Insurance “relief” by an employer each pay day is not compliant with tax and Social Security legislation.

This further statement focuses on the use of Dispensations, particularly in the context of Pay Day by Pay Day Tax Relief Models and other arrangements where expenses are not reimbursed but tax “relief” is claimed to be administered each pay day by the employer to reflect expenses incurred by the employee.

Further information is set out in HMRC's statement which is available on here.