Income Tax Earnings and Pensions Act 2003

[suityou01]

Was apparently amended from 6th April 2014. As I have no brain I cannot understand it, nor can I find anything on here using the search facility.

If anyone has covered it would they be so kind as to post a link to the article / post / thread.

Apologies in advance.

[LisaContractorUmbrella]

There have been lots of changes - probably the most pertinent to the industry is here: ESM2039 - Agency and temporary workers: agency legislation - provisions from 6 April 2014: the employer for tax purposes (6 April 2014 onwards) but there are others which could have relevance - changes to the Limited Liability Partnership rules for instance.

Was there anything in particular that you had in mind?

[suityou01]

There have been lots of changes - probably the most pertinent to the industry is here: ESM2039 - Agency and temporary workers: agency legislation - provisions from 6 April 2014: the employer for tax purposes (6 April 2014 onwards) but there are others which could have relevance - changes to the Limited Liability Partnership rules for instance.

Was there anything in particular that you had in mind?

Not getting mugged by Hector. I am Ltd. I put my contracts through IR35 review and work as hard as possible to demonstrate I am outside IR35. I was told these changes were IR35 related. Am I misinformed?

[LisaContractorUmbrella]

Yep I think you may have been misinformed - I went to several meetings with HMRC about the changes to the legislation and they have said all along that PSC's won't be affected as dividend income doesn't arise from the provision of the workers' services (it's paid from the profits of the business) and is therefore not a consideration under the legislation. More info here: ESM2051 - Agency and temporary workers: agency legislation - provisions from 6 April 2014: service companies (including PSCs)

HTH

[suityou01]

Yep I think you may have been misinformed - I went to several meetings with HMRC about the changes to the legislation and they have said all along that PSC's won't be affected as dividend income doesn't arise from the provision of the workers' services (it's paid from the profits of the business) and is therefore not a consideration under the legislation. More info here: ESM2051 - Agency and temporary workers: agency legislation - provisions from 6 April 2014: service companies (including PSCs)

HTH

TDH

[TheFaQQer]

Not getting mugged by Hector. I am Ltd. I put my contracts through IR35 review and work as hard as possible to demonstrate I am outside IR35. I was told these changes were IR35 related. Am I misinformed?

Contractor Weekly has an article entitled "New Legislation Causing Nervousness" this week about the legislation and how some agencies seem to be interpreting it.

The legislation looks to close false self incorporation as a tax-removing measure, targeting temps etc who in the past have been forced to incorporate by some agencies. It should not affect the likes of us.

[LisaContractorUmbrella]

The case cited to me by HMRC was PA Holdings Ltd V HMRC which involved dividends paid to employees PA Holdings drops appeal in dividends case | AccountingWEB. As you say Faqqer it's not designed to catch out the likes of you . The way it was explained to me was that HMRC can never state anything absolutely categorically in case someone devises a scheme that they hadn't thought of.

[TheFaQQer]

The case cited to me by HMRC was PA Holdings Ltd V HMRC which involved dividends paid to employees PA Holdings drops appeal in dividends case | AccountingWEB. As you say Faqqer it's not designed to catch out the likes of you . The way it was explained to me was that HMRC can never state anything absolutely categorically in case someone devises a scheme that they hadn't thought of.

HMRC released a summary note (linky) - pages 24 and 25 basically summarise to "as you were for IR35" but not as clear cut as that.

[LisaContractorUmbrella]

This is the relevant bit from that note:

"a) As set out above, the legislation will only apply when remuneration is received by
the worker as a consequence of providing the services. Therefore dividends paid to
the worker as a genuine consequence of their shareholding in the PSC will not
normally fall within the new Agency legislation.1"

The taxation of dividend income falls under different legislation to the ITEPA - the Income Tax and Trading Income Act 2005

[LisaContractorUmbrella]

This might clarify things as well ESM2017 - Agency and temporary workers: contracts between an agency and a company