Tracking costs of moving staff

NEARLY half of UK companies have either no system or an inadequate one for tracking and reporting relocation expenses as required under the 1993 Finance Act, according to a survey published by accountants Ernst & Young and the Confederation of British Industry, writes Roger Trapp.

However, the new rules - which also include a cap of pounds 8,000 on relocation expenses and benefits before they are taxed - do not appear to be putting employers off moving their staff.

The survey found that companies spending between pounds 20,000 and pounds 25,000 per person on relocation were finding new ways of containing costs.

To help them further, Ernst & Young and TraQs Consulting, a specialist in producing systems for tax and human resources departments, have developed a computer software package.

They believe the Relocation Companion, which is compatible with Windows and will cost pounds 1,000 when it goes on sale in September, will help employers of all sizes to avoid expensive penalties from the Inland Revenue by enabling them to manage quickly and accurately the tax, National Insurance and VAT implications of moving their employees.

Michael Kaltz, employer services partner with Ernst & Young, said: 'The radical changes in the tax treatment of relocation expenses last year have caused all employers to review their tracking and reporting procedures. A great number are finding their systems just cannot cope. The Relocation Companion provides the solution at an extremely competitive price.'

TraQs works with professional firms and company human resources departments to offer information technology solutions to tax and personnel problems.

It sees the Relocation Companion as a complement to the Expat Companions, a system it developed that banks and other organisations with operations around the world use to arrange the financial and other logistical aspects of moving employees from one country to another.

Michael Elia, at TraQs, said that, although the changes to the tax rules did not appear to have dissuaded companies from moving key personnel, they had led to changes in approach. 'They are adjusting what they pay and how they pay,' he said.

However, he added that companies had to be careful, since too many adjustments could upset employees. 'It's a bit of a tightrope,' he said. But the Relocation Companion was intended to provide the informationneeded to keep such problems to a minimum.