Corporate Tax Management Essay Example | Topics and Well Written Essays - 1500 words

Corporate Tax Management - Essay Example On the contrary, hiring employees on the permanent basis can procure long-term benefits for the employer. Thus starting with the measurement of tax benefits for employers favouring the temporary staffing, the paper moves on to the evaluation of long-term benefits the employer could attain by engaging employees on the permanent basis. During the recent years, there has been a massive uplift in the staffing activities of intermediary companies in the United Kingdom. There are abundant factors that contribute to the uplift in the trend on the part of both the employers and employees. Employees are of the view that self-employment on the temporary basis pays more than the permanent employment as there happens to be several opportunities for them to enter job markets. They often associate it with the flexibility of working conditions and requirements. There are also some skilled persons whose skills are highly demanded by the employers and in order to make the most of their skills, they prefer to work on contractual basis rather than working and clinging permanently to the same company. On the part of employer, however, there appear to be several other factors that encourage them to go for intermediary companies in the pursuit of temporary workers. ... It not only saves the employers from the legal responsibilities but also to the great extent facilitates in the employers' intention to evade taxes that are otherwise payable on the permanent hiring of employees. The investigation by the UK treasury confirms that there has been an increasing tendency on the part of employers and corporations to evade taxes by way of staffing through intermediary companies. The current UK taxation system allows certain exemptions on the taxes to be paid in the case of temporary employment by the employer, which consequently encourages the employers to use this strategy to avoid their tax liabilities. UK law clearly defines and differentiates the meaning of employees and temporary workers so as to explicate the tax liabilities as well as exemptions and also to avoid any exploitation of these terms by any of the parties. However, it fails to recognise the probable exploitations of loopholes in tax laws concerning the temporary employment on the part of the employers. Therefore, the present UK tax system in the form of tax credits or tax exemption allowed in the case of temporary employment encourages to a great extent the exploitation of laws for the purpose of tax evasion on the part of employees. Although staff engagement only via the intermediary companies and not through permanent employees does not in the direct sense implies the employer's intention of tax evasion, but the increasing trend as evident in UK and also the decreasing tax payments due to the provision of temporary workers by the intermediary companies indicate the fact that there exist some significant loopholes in the tax system that aggravate the current situation. In