Members of the UK Computing Services Association are up in arms over an Inland Revenue ruling that the companies in the sector must pay tax on the expenses they pay to staff working on contract at customer sites. The Revenue’s position is that the postings are the employee’s place of work for the duration of the contract and therefore any assistance in paying travelling expenses is taxable. The companies – with London W-based Vista Computing Services Ltd leading the campaign – argue that the ruling, if it stands, will mean that they have to raise their charges to customers for contract staff sharply, putting them at a crippling disadvantage to continental competitors. It could also land them with an enormous retrospective tax bill – the Revenue can demand tax for the past six years as well as the current one – which would knock a nasty hole in the results of the likes of Logica Plc, Sema Group Plc, SD-Scicon Plc and other quoted firms. According to the Financial Times, a UKP200,000 fund is being established to finance the fight with the Revenue.
