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Important Information

Offshore Payroll Providers Under Fire In UK Budget


25/03/2013

The Low Incomes Tax Reform Group (LITRG) has welcomed the UK Government's stated commitment to launch a consultation on new rules - for inclusion in the 2014 Finance Bill - that would ensure that offshore employment intermediaries pay the right amount of tax and national insurance contributions (NICs) in respect of employees and contractors on their books.

By structuring payroll arrangements outside of the United Kingdom, employers operating through these offshore intermediaries may be able to avoid paying tax and national insurance contributions in respect of UK workers' remuneration. The Government estimates that around 100,000 UK workers have their affairs structured in this manner, some unwittingly, and may end up being ineligible for state-funded maternity or sick leave.

LITRG Technical Director Robin Williamson explained the Group's campaign: "It is not unusual for employers to delegate their payroll obligations to intermediaries, some of whom may be based offshore. Some intermediaries account for tax and NICs properly, but others engage in imaginative, sometimes even abusive, schemes which result in tax and NICs being avoided."

“The Exchequer loses out from such schemes, but the real victims are the workers themselves. They often have no real choice but to accept offers of work even if the terms look unacceptable to them. If they accept, they may face investigation by HMRC years later, particularly if HMRC cannot get at the employment intermediaries."

“We trust that the protection of these low-income workers will be a paramount concern in the consultation.”

www.tax-news.com

 



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