Some admin requirements delayed, but the rules themselves go ahead as planned
The onshore employment intermediaries changes Onshore employment intermediaries: false self employment published by HM Revenue & Customs on 10 December 2013, will force many agencies and similar intermediaries to put more of their workers onto the payroll rather than being able to treat them as self employed. HMRC has now published a summary of responses document to the Onshore Employment Intermediaries: False Self-Employment consultation. The Tax Faculty made its response as TAXREP 04/14.
HMRC has also published draft guidance on the new Definition of supervision, direction or control.
HMRC is currently in the process of updating the Employment Status Manual guidance in relation to the Offshore and Onshore measures and expects to publish this in the near future.
The response document highlights some areas where, in response to comments received, there will be some changes to the original proposals as well as guidance to what the rules are supposed to mean.
- The new reporting requirements will not come in until the first quarter of 2015/16. This is to allow HMRC to develop and test the new system with stakeholders. HMRC is also currently reviewing a reduced return requirement in relation to personal service companies (PSCs) following responses to the consultation. We expressed some concerns about data security, particularly in relation to large numbers of National Insurance numbers being emailed.
- In response to concerns that the control test will be difficult to operate in practice, in particular with a company’s ability to prove a negative ie, that there is no control over the worker, HMRC is developing extensive guidance (see link above). We have some concerns about some of the examples in this guidance and will be making further representations to HMRC about these. If readers have particular issues in relation to these, please email [email protected] with suggestions.
- Where a company has been provided with fraudulent documents purporting either no control or right of control, or that the worker had had income tax and NICs deducted through PAYE by a business further down the contractual chain, the PAYE liability will now sit with the body providing these documents.
- Following concerns about interaction with the IR35 legislation, HMRC published a technical note setting out HMRC’s view of the interaction between the agency legislation and IR35. See our news item Agencies and other intermediaries under the tax spotlight.
- There is to be a Targeted Anti Avoidance Rule (TAAR) in the legislation to deter those who seek to find other avoidance vehicles and set up structures to circumvent the legislation including PSCs.
The Government intends to legislate for the revised proposal in forthcoming Bills as follows:
- The tax legislation, together with powers to make regulations for record keeping, returns and penalties will be included in Finance Bill 2014.
- The equivalent National Insurance legislation will be made using existing vires and regulations will be made on 13 March.
- Subject to approval by Parliament, all the legislation, except the record keeping, returns and penalties regulations, will come into force on 6 April 2014.
- The regulations for record keeping, returns and penalties, subject to Parliamentary approval will come into force from 6 April 2015.7
Original article written by and sourced by – icaew.com