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2. Company X enters into an Employment Contract (the ‘Contract’) with the User which provides that the User will receive a salary from Company X paid at the National Minimum Wage or National Living Wage (both referred to hereafter as ‘the Salary’) plus holida y pay. The individual receives the Salary which is taxed through PAYE and a second untaxed payment (‘the Untaxed Payment’) paid into the User’s bank account as a single amount. The Contract includes the ability for company X to offer additional ‘benefits’ to employees. 3. The Users provide services to the End Users and complete timesheets, or electronic time recording system as required by the End User. Company X invoices the End User or the Agency for the work done and receives payments. Company X pays Users the Salary, wh ich is shown on their payslips (the ‘Payslip’), the Salary is paid after deduction of income tax and National Insurance Contributions (NIC). At the same time Company X pays an Untaxed Payment which is not recorded on the Users’ Payslips. 4. Company X also issues a Reconciliation Statement (‘Reconciliation Statement’) which show the gross payment received by Company X from the End Users at the full hourly pay rate charged to the End User. The Reconciliation Statement also shows a lower hourly pay rate which is multiplied by the hours worked (to the maximum shown in the contract) to show the amount from which deductions are taken. The net balance represents the Salary which is then carried forward to the Payslip for the pay period on which PAYE is applied.
5. The additional Untaxed Payment is shown on a separate document called a Withdrawal Statement (‘Withdrawal Statement’).
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Disguised remuneration: transfer of liability technical note Published: 7 December 2023 Emailed: 13 December 2023
HM Revenue and Customs (HMRC) has released draft regulations and technical guidance for how disguised remuneration tax liabilities can be transferred from a company to the individual.
It details the process and lays out the three scenarios where it could be applied: • the employer no longer exists • the employer is offshore • the employer can’t pay the liability.
Much of the legislation to make this possible is already in place, however 2 annex documents lay out additional draft regulations that will be required.
While these powers should only be relied on in extreme circumstances, HMRC is keen to collect outstanding liabilities and puts the onus on employees to understand, spot and report where they are involved in a disguised remuneration scheme.
Additional loan charge information is also included.
HMRC also state the guidance will be fully updated in early 2024, so if this is of interest to you, keep an eye out for future changes.
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NCA warns of attempts to evade financial sanctions Published: 11 December 2023 Emailed: 13 December 2023
The National Crime Agency (NCA) has issued a warning that Russia is attempting to circumvent sanctions by purchasing UK good and services through intermediary countries.
cipp.org.uk
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