New Finance Bill 2017-18

[ChimpMaster]

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The government has said that HMRC will publicise this. I have no idea whether they will write to you. But if they don't write to you the above still applies. It is your responsibilities and there are penalties for not doing it.

This is kind of what I'm getting at. There are contractors who are no longer in the game and don't frequent forums like CUK and don't have open enquiries. Some might well be retired. How are they supposed to know that they need to volunteer Loan information to HMRC? Even if it's in Tax Returns as a separate question/page, this is relying on some degree of luck or intellect for the individual to notice.

Another way is for HMRC to write to affected individuals. But how will HMRC identify every single person that used a tax avoidance scheme? Especially those are not caught in any existing net. And if some people do slip through, is it then HMRC's fault or the individual's? (I know the answer but it feels so wrong).

The only sure-fire way this can work is if HMRC write to all 2.5m people who complete tax returns each year. Then the onus is truly on the individual to respond, regardless of their current status and/or lack of knowledge.

[Iliketax]

The only sure-fire way this can work is if HMRC write to all 2.5m people who complete tax returns each year. Then the onus is truly on the individual to respond, regardless of their current status and/or lack of knowledge.

You'd have to talk to HMRC. I've not asked them who they plan to write to. But writing to all 10.8m+ (not 2.5m) who current complete a tax return probably won't help those people. They'd have to write to everyone who has, or potentially could have, done a tax return since 1999. That's almost everyone. Hopefully, HMRC will have their current addresses.

[EBTContractor]

If the employer no longer exists, the individual is liable for the income tax. The technical note today confirms the employee won't be liable for NIC.

Do you mean won't be liable for employer NIC or no NIC at all?

[Iliketax]

Do you mean won't be liable for employer NIC or no NIC at all?

HMRC said:

Dissolved employer
As the third party in a DR scheme exists independently from the employer, it is possible for a Part 7A charge to arise where the employer has been dissolved or no longer exists.

Sections 7, 8 and 9 of the Taxes Management Act 1970, set out the employee’s responsibility to return the employment income to HMRC by making a self-assessment return. As a result the employee is responsible for reporting the income and paying the tax to HMRC.

The employee will not be liable for any Class 1 NICs due.

[webberg]

I think you may be missing something.

The change has two main impacts:

1. It stops the end-user having to operate PAYE (e.g. the bank that got the benefit of the work done). In practice, these end-users (in almost all cases) knew absolutely nothing about the loan arrangements and who (in almost all cases) did not know that there was an offshore employer when the loans were originally made and (in almost all cases) still know nothing about any loans or any offshore employer. So it is an attempt to protect innocent companies who might be inadvertently caught by other anti-avoidance legislation.

2. It saves the contractor with an offshore employer that no longer exists from having to pay employee's NIC and being at risk of a penal tax charge (e.g. if the end-user did not recover the PAYE promptly). So for someone with a large loan, it means 45% tax rather than 47% or even 67.66%.

So far from isolating anyone, it is protecting people who had nothing to do with the loans and protecting those with offshore employers.

I think I would have to disagree on two fronts.

Often the end user knew exactly what was happening and in some cases insisted it did happen in order to reduce their costs as far as possible. This is why I find this part of the alterations so unfair. I suppose at the end of the day the lobbying power of big business outranks the soft targets of individuals.

On the second issue, I understand the point about not visiting a penalty on an employee, but I fail to see why the employer does not remain liable. The employer is liable and it's not the fault of the employee if HMRC failed to take action to audit their on PAYE references.

[EBTContractor]

HMRC said:

Thanks. So it talks about "employment income". Wonder if there is no NIC due due for self-employed schemes too...

[BrilloPad]

You'd have to talk to HMRC.

Don't be so stupid! HMRC talk. We comply.

[Samatra]

best way to tackle this is via litigation.
there must be thousands of people impacted by this.
if we can get say 5000 to pay £15 to £20 per month that should give us a good fighting fund.
This will give us the sort of funds big businesses have.
One of the reasons HMRC don't go after the big boys is they know they have the fire power to fight back hard in the courts.
Why don't they just amend the loop holes google and co use any make them retrospective like they have done to us.

The hard thing is to get all the different groups of contractors to unite and also reaching out to those that have their head in the sand.
I know of a few that have not got a clue whats coming their way in 2019. They think HMRC have gone quite as they have not had any correspondence from them for a few years.
guess HMRC know this so its a case of divide and conquer.

[Iliketax]

On the second issue, I understand the point about not visiting a penalty on an employee, but I fail to see why the employer does not remain liable. The employer is liable and it's not the fault of the employee if HMRC failed to take action to audit their on PAYE references.

The employer is still liable. The end-user is currently not liable if there is a UK employer. Now the end-user will not be liable if there is a non-UK employer. None of this changes any liability of the liability of the actual employer. But if there is no employer no longer exists, it is the individual's liability.

[Iliketax]

Wonder if there is no NIC due due for self-employed schemes too...

The April 2019 loan charge for self-employed is trading income and so class 4 NIC is due in the normal way.