Since the introduction of IR35 in 2000 the accountancy/umbrella/contractor support sector has grown at breakneck pace, so much so that HMRC’s focus turned to dealing with various non PSC models, all of which had one thing in common – tax avoidance, namely schemes to encourage payment of less PAYE and NICs.
It has been reported that an umbrella company has been ordered to pay back incorrectly claimed tax relief of some £11m to HMRC.
In 2020 the Department of Business Enterprise and Industry Skills (BEIS) introduced legislation which requires every employment business (‘agency’) to produce information on pay to those candidates that it intends to supply. This is a step that should be taken before the agency enters into any contract with the candidate.
Since the launch of the legislation, it is understood that compliance with the requirement has not been good, and BEIS has recently upgraded is capacity to look into this and complaints that arise.
The government has announced legislation in response to the current strike action by rail workers and the threat of industrial action from other sectors. The legislation will allow the supply of agency workers to replace workers taking part in industrial action.
Is this something that should be welcomed by the industry? Or is it likely to cause more problems and are there more important areas surrounding compliance that should be addressed.
In this country we have the belief, encouraged by successive administrations, that it’s ok to be self employed or work via a company. After all, you can buy a company off the shelf at the click of a few buttons for less than £25. Once set up you are entitled to a host of business tax reliefs whilst at the same time saving anyone you work for the trouble of paying out employer NICs. What could be better?
Whatever investment you plan to make it is always wise to check the facts behind the proposal, particularly if the advice source is not regulated, and history shows that a failure to do so can be very expensive, particularly when it comes down to tax avoidance.
We are pleased to announce that a representative from the Department of Business, Energy and Industrial Strategy (BEIS) will be joining Lawspeed’s presentation on the tax and compliance issues arising from using off payroll staff on 14th July.
This seminar on 14th July in London will take place in conjunction with HMRC to explain the managed service company (MSC) rules, why hirers and employment businesses could be liable for unpaid levels of PAYE and NICs, and the steps to take to avoid that risk.
It has recently been widely reported that HMRC is pursuing numerous contractors serviced by the accountancy group Churchill Knight. See for example ‘Shock tax bills
The recent action of P&O, in dismissing hundreds of employees apparently without notice or consultation, has hit the headlines and caused much consternation including at government level.
