The use of Intra Company Transfers is contentious at the best of times. But when the economy is struggling, the practice of bringing offshore workers to the UK, is highly contentious.
A recent report from the Public Accounts Committee (PAC) criticised the controls to prevent the abuse of ICTs as well the inclusion of living allowances in the salary.
ICTs allow companies with a UK operation to bring its workers offshore to the UK. If you have read this blog before you would have noticed I have written a lot about it.
The reason I am writing now is because I saw an article in the Indian press about Nasscom’s view on some of the PACs recent criticism of how Indian IT firms use the ICT system.
Nasscom represents the Indian IT service providers.
Criticism 1 – The government recently introduced a rule that stated that a worker coming to the UK for more than a year should be paid at least £40,000. If ICTs come for up to a year they should be paid at least £24,000. This is heavily criticised because living allowances, which are not taxed, can be included in the salaries. This means ICTs cost a less than the UK worker to the employer. Here is Migration Watch’s explanation of how the tax system benefits ICTs.
According to Business Line (Hindu Times) Nasscom ‘s response is: “Allowances are critical part of the salary of the foreign workers and cannot be excluded as it is a significant cost that sponsor has to bear to fill in the position by ICT worker.”
Criticism 2 – There has also been criticism of the policing of the ICT system. For example the National Audit Office recently said there were potentially thousands of ICTs still in the UK despite their contracts being over. There have also been criticisms that applications for ICT visas are not checked out properly. The PAC said that the Border Agency does not have the management in formation it needs to control the ICT scheme. See this article about a Public Accounts Committee report.
According to Business Line (Hindu Times) Nasscom ‘s response is: “We also believe that the current mechanism has enough controls already at the hands of the UK Government — including audit rights — to ensure that the system is not misused.”
According to the same article Nasscom also said it regretted the fact that the committee had not had the opportunity to examine the issue in similar depth as the Migration Advisory Committee (MAC), an independent body that advises the Government on migration matters.
The MAC reported on ICTs and the immigration cap back in November.