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ISSUE 1
the OPW rules, then they can be paid gross. Since these rules have been in place some high-profile organisations including those in the public sector have had HMRC reviews and been found to have made mistakes resulting in large settlements with HMRC. This is because where organisations incorrectly applied the rules, HMRC can recover the tax, NIC, and Apprenticeship Levy due plus late payment fines and additional interest may be charged. As HMRC can charge up to 100% of the outstanding tax owed this can result in some double taxation once you consider the tax position of the worker and their intermediary. “Since these rules have been in place some high- profile organisations including those in the public sector have had HMRC reviews and been found to have made mistakes resulting in large settlements with HMRC.”
HMRC the power to set off certain tax and NIC paid by the worker and their intermediary, from settlement payable by the end-client/deemed employer. The regulations came into force on 6 April 2024 and are fundamentally identical to the draft regulations published for consultation on 25 January 2024. The offset will apply from 6 April 2024 to relevant off-payroll working errors that arose on or after 6 April 2017. Previously the end-client/ deemed employer was liable for all payroll liabilities and withholdings lost due to any errors made in applying the OPW rules.
However, they include several modifications:
A new “trigger event” has been introduced. This event occurs when a Regulation 80 direction issued by HMRC, which includes tax on the off-payroll working “deemed direct payment”, becomes final and conclusive. The criteria for when tax is assessed have been revised. Now, tax is considered assessed when it is both included in a return and accounts for reliefs included in that return. The set-off direction notice must also specify the services provided for which the deemed direct payment was considered to have been made. Furthermore, the regulations now refer exclusively to the deemed employer, allow HMRC to forgo notifying the
What is new?
On 13 March 2024, new regulations were established to implement a statutory set-off mechanism. This mechanism aims to rectify the double or over-collection of tax in instances where there is non-compliance with the off-payroll working rules. This gives
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