Payroll insight
officers as chairs on police misconduct panels (PMPs). The writer’s review of the available information shows that, typically, there would be a pool of LQCs who are likely to chair some seven to eight PMPs out of eighty-plus PMPs in a region in a year. Initially HMRC stated that LQCs were office holders but have now accepted that they are not. This may be because LQCs do not have the permanence of an office holder. In the same way, any ‘independent’ person ‘appointed’ to carry out a specific review may not be an office holder, but all such cases should be considered in detail to ensure that employers don’t fall foul of what can be a difficult area to handle. This situation is likely to be exacerbated with the changes to the intermediaries rules coming into place in April 2017 where public sector engagements via an intermediary will need to have tax and NICs deducted if the worker would have been an office holder without the interposing of a company. This may include the specialists mentioned above and also workers engaged as interim directors of finance, chief executive
officers, etc. HMRC are currently preparing the employment status service (ESS), a digital tool, which is the successor to the employment status indicator. The ESS does not need to be used if the worker is an office holder as they are automatically within the IR35 requirements (see below). However, should it be agreed that the worker is not an office holder, the ESS should then be used to see if, apart from the insertion of the company, the worker is an employee. ...taxing of office holders engaged via a company is a new concept for the public sector... It is not just the one-man company that the rules apply to. The writer has recently seen an engagement of a chair of the Children’s’ Safeguarding Board, an office holder, where the chair is a director of a
company with three directors and a dozen employees. The new rules apply to any worker who has a material interest (more than 5% of the shares) in the company, so in this instance tax and NICs will need to be accounted for. Although the criteria for deciding self-employment or indeed determining whether someone is an office holder has not changed, the taxing of office holders engaged via a company is a new concept for the public sector so care needs to be taken that they are not overlooked. n What is ‘IR35’? ‘IR35’ is the number of the press release issued by the Inland Revenue, now HMRC, outlining the legislation that would be, and has been, introduced to tax ‘disguised employment’ at a rate similar to employment. Essentially, IR35 applies to workers who receive payments from a client via an intermediary and whose relationship with their client is such that had they been paid directly they would be employees of the client. Using ‘IR35’ is shorthand when referring to this legislation and the requirements.
Excuses for not paying the NMW
The Government has recently revealed some of the most bizarre excuses used by unscrupulous bosses for not paying workers the NMW
A list of excuses was published in January to coincide with a new £1,700,000 awareness campaign that aims to make sure workers are being paid at least the national minimum wage (NMW) depending on their age. The campaign encourages workers to check their pay to ensure they are receiving at least the statutory minimum ahead of the increases having effect from 1 April 2017. Some of the worst excuses that employers caught out for underpaying staff have given to HM Revenue & Customs investigators comprise: ● The employee wasn’t a good worker
so I didn’t think they deserved to be paid the NMW. ● It’s part of UK culture not to pay young workers for the first three months as they have to prove their ‘worth’ first. ● I thought it was ok to pay foreign workers below the NMW as they aren’t British and therefore don’t have the right to be paid it. ● She doesn’t deserve the NMW because she only makes the teas and sweeps the floors. ● I’ve got an agreement with my workers that I won’t pay them the NMW; they understand and they even signed a contract to this effect.
● My accountant and I speak a different language – he doesn’t understand me and that’s why he doesn’t pay my workers the correct wages. ● My workers like to think of themselves as being self-employed and the NMW doesn’t apply to people who work for themselves. ● My workers are often just on standby when there are no customers in the shop; I only pay them for when they’re actually serving someone. ● My employee is still learning so they aren’t entitled to the NMW. ● The NMW doesn’t apply to my business. ❑
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Issue 28 | March 2017
| Professional in Payroll, Pensions and Reward |
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