PART 1: DATES, DEFINITIONS AND OBLIGATIONS
VALUE ADDED TAX (VAT) VAT is a tax on the final consumption of certain goods and services in the home market but is collected at every stage of production and distribution. A business should keep a record of its sales and purchases, and the amount of VAT it has charged and can reclaim. VAT will apply to some aspects of the payroll function, mileage payments and expenses reimbursements, should they be carried out within payroll, however payroll staff need nothing more than a rudimentary knowledge of VAT in respect of record keeping and retention of receipts. All of this can be found in HMRC guidance at https://www.gov.uk/topic/business-tax/vat. COPYRIGHT © 2021 THE CHARTERED INSTITUTE OF PAYROLL PROFESSIONALS WEEKLY WORKING HOURS From 1st April 2009, the calculation of weekly working hours changed as a result of the introduction in the UK of new minimum statutory holiday entitlement in excess of that required by the Working Time Regulations (and the originating EU Directive). Prior to this date, when calculating the average over a 17-week period, any weeks where a worker took a statutory holiday were included in the total hours (the weeks may not be used to reduce the total and similarly the overall average). As this principle cannot be extended to the additional 8 days, these days can be used to reduce the average by being re-classified as ‘non-working time’ in the same manner as contractual leave is now. This may bring difficulties for employers who make regular calculations of working hours in order to ensure adherence to the 48-hour maximum. WORKER A worker as defined for National Minimum and Living Wage regulations is someone: • working under a contract of employment (an “employee”), or • under some other form of contract (called a “worker’s contract”) under which he agrees to perform work personally for someone else but is not self-employed. A director appointed under the Companies Act 2006 and who assumes the rights and obligations of a director is an office holder and not a “worker” and may or may not be an employee too depending upon whether there is a formal contract of employment or a service agreement. All persons carrying out work for an organisation are defined as “worker” for various purposes. For automatic enrolment purposes it is important to determine if the person is a worker for the organisation in which case AE will apply or if the person is a worker for someone else in which case the AE requirements fall to that other person. No printing, copying or reproduction permitted. In some cases, someone subject to the off-payroll working rules for instance, a worker can be an external contractor but their fees, as described upon an invoice for services, must be processed through PAYE in order that statutory deductions can be calculated and accounted for. No other worker rights apply in such cases. The definition of worker, therefore, can be different for different organisations and for different purposes and it is important for employers to understand the anomalies and apply themaccordingly.
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