A Friends Company Stopped Paying Him His Claims On Accommodation ?

my friend is a contractor and he used to claim expenses stating he was staying in a b&b. however the umbrella company did an expense audit and he failed. he is now not being paid for any claims unless supported with a receipt. hence, he decided to quit and join another umbrella company. could anyone please let me know the legal implications of this? will the umbrella company tip off HMRC? will the tax man be notified? and if the tax man is notified what is the worst case scenario? also he is an immigrant….will this make things worse?