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working rules, sometimes referred to as IR35. I’m sure all of you do everything in your power to ensure a determination is made correctly for the staff you engage. But sometimes errors happen or HMRC may decide to take a different stance to you. Where this happens, the deemed employer can become wholly liable for the income tax and national insurance (NI). This issue could occur when a worker or intermediary paid tax, believing themselves to be outside of the off payroll rules, but the engager has also made payments for tax and NI. HMRC currently doesn’t have the power in legislation to set-off tax and NI paid by the worker or intermediary against the pay as you earn liability of the deemed employer. Instead, workers are notified where they may be due a refund. The consultation explores the possibility of alternative solutions which allow the liabilities to be shared between the worker and client by estimating set-off amounts. This is a meaty consultation, with a lot of examples, illustrations and details of the proposed process, so if you don’t handle any off payroll determinations, count yourself lucky and avoid this one. But if you do, then this is definitely a consultation to dive into, as it could impact internal processes or future business decisions. For affected businesses, it’s likely that the additional information required will impact processes most. Outside of this, HMRC will be responsible for determining where a set- off amount may be due. Tougher consequences for promoters of tax avoidance Closes 11:45pm on 22 June 2023 If there’s one thing we don’t want, it’s hard working, compliant payroll professionals and businesses feeling hard done by unscrupulous parties taking advantage of the tax system. HMRC has been making waves in this area and showing its clear intention to stifle the promotion and use of tax avoidance schemes. This consultation is looking at giving HMRC more powers to kerb these schemes and stop their promotion and use. There are two proposed changes within this consultation. The first is regarding stop notices, which are legally enforceable notices to any person suspected of promoting tax avoidance arrangements. Stop notices can incur civil
penalties if breached, from £5,000 per failure up to £1 million for continuing to promote the arrangement. The proposed change in this area is to make failing to comply with a stop notice a criminal offence, in addition to the civil penalties for non- compliance. HMRC is asking if this change is likely to have the desired outcome, which is deterring the use and promotion of such schemes. The second proposal would give HMRC the power to expedite the disqualification of company directors. With the appropriate evidence, HMRC could bring a director to court to get them struck off, without the involvement of the Insolvency Service. While it’s most likely (we hope) that you won’t have to be on the receiving end of such action, it’s always important to have an awareness of the ways in which some companies attempt to avoid tax labilities. It’s also important to ensure the proposals don’t overstep into other areas which could cause unforeseen consequences in the wider tax sphere. If you see any areas for concern, let HMRC know. Construction industry scheme (CIS) reform Closes 11:45pm on 20 July 2023 There are two proposals put forward regarding unnecessary administrative burdens in this consultation. The first you won’t care about unless you happen to be a landlord. If, however, you are a landlord,
by software solutions? Or are we to see a convoluted and unnecessarily burdensome process? This is the point of consultations, so if you have an opinion, make it known. Improving the data HMRC collects from its customers – summary of responses Government response Not all of the releases were new consultations. We also received a response regarding a consultation focussed on HMRC data collection. It was confirmed steps will be taken to ensure regular contractual hours worked, or actual hours for the hourly paid, rather than a banding, are included on a real time information field. This will be introduced once HMRC has worked alongside businesses and software providers to allow sufficient time for the changes to be implemented successfully and to consider any challenges which may arise from the new requirements. The response document also states there’ll be no further collection of data relating to sector, occupation or location. This is due to the concerns and challenges raised by respondents to the consultation, which centre on the extra administrative burdens this could place on organisations. This shows the power of consultations and why you should get involved if you have any concerns about proposals offered by the government. Believe it or not, there was even more… There were many more consultations outside of the world of payroll. You should go and have a look, especially if you work in accountancy, but one we do want to flag is the Help to save reform consultation. With a clear focus on pensions and savings adequacy across the country, especially as we can’t seem to shake the cost-of-living crisis, this may be the ideal place to highlight where additional government initiatives could be focussed. If you do decide to respond to a consultation, remember that you don’t have to answer every single question. The size of some can be daunting, but it’s important to give your opinion in line with the questions as much as possible. Don’t be dissuaded by questions you don’t want to, or don’t feel you can, answer. Make your voice heard and take part. n
I apologise, now go and look up the proposals, they might be important.
The second is a potentially larger issue, whereby monthly CIS obligations for large groups (sometimes comprising of over 100 companies) create additional administration when ensuring reporting is conducted for the correct companies. This is identified as being a particular issue in the property sector. The government wants to test a ‘CIS grouping arrangement’ where a single company in a group could be nominated to submit a single CIS return for the entire group. This differs from the current process of using a ‘scheme representative’ in that only one return would be needed, rather than the usual one per company. The consultation wants views on how this could be implemented and any other concerns, as well as the impacts on software provisions for the grouping arrangement. This is likely the sticking point of this change, can it be effectively and easily administered
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| Professional in Payroll, Pensions and Reward |
Issue 91 | June 2023
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