|
Issue 40; 23 February 2000
Revenue Issues Guidelines | PCG Approves Constitution
REVENUE ISSUE REGULATIONS
The draft Finance Bill and National Insurance Contribution
Regulations were published yesterday by the Revenue. There
are no real surprises but a few interesting points such
as:
They have extended "intermediaries" to include not only
companies and partnerships, but also individuals. This may
be aimed at schemes which were trying to avoid IR 35 by
having the contractor working as a self employed sole trader
contracted to an offshore management company which then
supplied the contractor on to the UK client. It was a key
feature of such schemes that the contractor appeared to
be outside the scope of IR 35 because they were working
as a sole trader.
However having an individual as an intermediary under IR
35 raises an interesting possibility that sole traders might
be able to work direct for clients without the client running
the risk, which exists at present, that the sole trader's
status might be held to be that of an employee rather than
self employed. Currently in such situations the client would
be liable for any additional PAYE or employer's NI that
was due. But if IR 35 applies to individuals then that liability
appears to shift to the worker, which would be good news
for clients and could encourage them to use consultants
who work as sole traders.
As expected the drafts make it clear that the definition
of relatives/connected persons includes a partner who is
living with the worker as husband and wife.
The Regulations also cover the situation where there is
a chain of more than one intermediary. There are rules to
ensure that all the income the worker receives from any
of the intermediaries is brought into account for IR 35
but they also ensure that there should be no double taxation.
However, in the event that the last intermediary in the
chain fails to account for all taxes and NI due in respect
of the worker then all intermediaries in the chain are jointly
and severably liable. The Revenue has confirmed to the PCG
that it is not intended that agencies or clients might be
held to be an intermediary within such a chain.
The Regulations clarify that the "deemed salary" payment
under the rules is due either at the expected dates after
the end of the tax year or on the date when the worker leaves
the company, or ceases to be a shareholder or office holder.
Hence the related PAYE and NI becomes due at those earlier
times if the worker cease to be associated with the company
or partnership.
Further work has been commisioned from our legal team to
investigate these regulations and this will be reported
on the PCG discussion forums. Members will note the seperate
Legal FAQ section which will be moderated by Bevan Ashford,
our retained Lawyers. With some 500 staff they are one of
the largest Provincial law firms in the Country and will
shortly be opening up a telephone hot-line for the benefit
of members. This will augment the advice provided on the
fora.
Work has now been finalised on the sample direct contract
as a result of extensive consultation. This contract, describing
a direct relationship, will now be completed and available
by the end of this month. This contract will be available
on the members site and work is starting on sample Agent/contractor
and Client/Agent contracts. These may be modified as a result
of the DTI Agency regulation review. The PCG is expecting
to be invited to further consultations with regard to these
regulations in the near future.
PCG APPROVES CONSTITUTION
The membership, in an Internet ballot, approved the new
rules and Nominations are now being accepted for the new
Consultative Council. Please see the members home page for
details. This is expected to be one of the first examples
of elections held entirely over the internet.
Kind regards
Kevin Miller
Finance Director PCG
|
