The Office of Tax Simplification (OTS) Reports on Employee Benefits

The office of Tax Simplification (OTS) has published its latest report on employee benefits and hopefully the recommendations will be adopted by HMRC.

The areas OTS are looking at are accommodation benefits, termination payments, removal expenses and long service awards although other items like mileage needs addressing.

I think the accommodation review is long overdue and will help workers understand the complex rules where employers provide short term accommodation, especially for overseas workers coming to the UK.

I welcome the work the OTS does and its objective to try and remove red tape and simplify our tax system can only assist small and medium businesses who cannot afford tax experts.

The report is being treated as a consultation and encourages people to contribute – view report

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Zero Hours Contracts

The zero hours contract consultation highlighted the benefits of having flexible working arrangements but where they were being abused was not acceptable.  The Government have come out and will now outlaw exclusivity within zero hours contracts.  Clearly this is common sense; how can you enforce exclusivity when you don’t give work in the first place?

Whilst I welcome this change, I am concerned about how this will be enforced and policed. The Government will start yet another consultation on this to determine strategy although they have at least shown intent to do something and this is a big step forward for closing exploitation of workers.

Using an umbrella, zero hour contracts are not used as this would not represent the overarching employment given by umbrella companies although within agencies zero hour contracts are continuing to be used.

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HMRC Name & Shame: National Minimum Wage

This weekend HMRC listed another 25 employers who have flaunted the national minimum wage rules and underpaid members of their staff.
What is fascinating is that they are all small employers and the real abusers are still being protected. A premier league football club was not named; yet had 3,000 workers underpaid and closer to home, a recruitment company was ordered to pay £167,000 yet wasn’t named either.  It seems that should a case be dealt with through the civil courts then the protection of the courts comes first and therefore taxpayer confidentiality applies.
This doesn’t seem fair, it’s almost like you would want to go to civil court, just to avoid being named and shamed.
I am sure that one of these companies will bring a case before the human rights court considering some of the shortages were only hundreds of pounds, yet the big employers got off without even a mention.
Umbrella companies should always be paying PAYE on at least the national minimum wage otherwise they too could find themselves either named and shamed or indeed in front of a civil court.

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Not the GREATEST DAY to SHINE for Gary Barlow

Once again a high profile celebrity hits the headlines with tax avoidance. There is nothing wrong with tax avoidance, it’s tax evasion that is criminal, however in today’s world morality also plays a part and now it seems aggressive tax avoidance is becoming equally as bad as evasion.

So should poor Gary give up his OBE? I personally don’t think so. Unfortunately as we all know there is a fine line and often grey area of tax legislation and advisors all have their opinion of this. Gary would have paid for advice around the scheme he “invested” in and even if it was to save tax you can’t blame him.

The whole issue is that HMRC stance has become more aggressive also and the argument of “this is not what the legislation was intended to do” is simply no help for the tax payer when these schemes are marketed by professionally qualified people who have interpreted the legislation differently to the original purpose. For many years this has been an unofficial battle between accountants and HMRC officers and now it seems the end is in sight, with HMRC looking to name and shame advisors are HM Government winning the tax battle at last?

Time will tell where this will end but one thing is clear, if it is too good to be true, think twice.

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On shore intermediaries legislation

Well following on from my past blog in relation to false self-employment, it seems that I was right and HMRC pushed through the legislation with very little change.

So since 6th April, agencies are now responsible for the employment status of their contract workforce. Thanks very much say the agencies!  But how can they be sure that the workers are paying the correct tax?

All this uncertainty means that now more than ever you need to know your supply chain and ensure that you are comfortable with their processes.

Whilst a welcome change was a deferment of reporting on this to HMRC, they have very cleverly kept the go live as 6th April 2014.  Whilst penalties within the first year will be limited I am sure HMRC will be looking for best practice methods on this.

My advice:

  • Use PAYE umbrellas or PSC only.
  • Get confirmation that PAYE has been reported to HMRC

This way, you don’t need to worry about “control & supervision”

Good luck!

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