New Finance Bill 2017-18

[BrownOwl]

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.

To a layman like myself, this looks like HMRC were too slow at investigating schemes and are asking Parliament to apply some retrospective legislation to cover themselves and get the tax from someone other than the employer.

[starstruck]

So am I right in thinking HMRC can transfer PAYE from employer to employee for both onshore and offshore employers?

I thought the transfer rules when they appeared in the budget talked only about transfer when the employer was offshore.

[ChimpMaster]

So am I right in thinking HMRC can transfer PAYE from employer to employee for both onshore and offshore employers?

I thought the transfer rules when they appeared in the budget talked only about transfer when the employer was offshore.

Isn't this whole argument a moot point? Eventually the contractor has to pay the tax.

Now, offshore or onshore:

If the employer doesn't exist, the contractor is liable for the income tax. If employed then no NICS (employer or employee) due. If self employed, then class 4 NICs are due.

If the employer exists, then they could be liable to the income tax + NICs charge, but the employee will have to reimburse the employer for the PAYE within 90 days of 5 April 2019. I'm not sure what happens if the employee doesn't reimburse the company.

[Iliketax]

So am I right in thinking HMRC can transfer PAYE from employer to employee for both onshore and offshore employers?

Sort of, yes.

1. If the employer pays the PAYE then the employee just has to pay an extra tax through self-assessment by 31 January 2020 (e.g. if the employer uses the wrong tax code). This is automatic.

2. If the employer no longer exists, the employee pays via self-assessment by 31 January 2020. This is automatic.

3. If the employer exists but doesn't pay and HMRC can't get it to pay they say that they will do a regulation 81 direction so that the employee is responsible. HMRC have not said much about the process.

I thought the transfer rules when they appeared in the budget talked only about transfer when the employer was offshore.

The budget did not mention this. Yesterday's Finance Bill prevents an end-user who was not the actual employer (e.g. the NHS in the case of a nurse) from having to pay the PAYE.

[Iliketax]

If the employer exists, then they could be liable to the income tax + NICs charge, but the employee will have to reimburse the employer for the PAYE within 90 days of 5 April 2019. I'm not sure what happens if the employee doesn't reimburse the company.

There's two bits to this:

1. Reimbursing the employer: That's up to the employer. If the employee doesn't reimburse then the employer could take them to court for the money the individual owe. There is a high court decision that confirms that the employee has a common law obligation to reimburse the PAYE. If you have a generous employer, they might say don't worry about reimbursing it. Or pay us five years time, or whatever. That's up to them.

2. Reimbursing the employer within 90 days of the 5 April 2019. This is a tax rule. If you don't reimburse promptly then the PAYE that you don't reimburse is subject to income tax and NIC (so if you owe £100 of PAYE then you will pay tax and NIC on that). So tax on tax. If you reimburse after 90 days, tough. You don't get this tax back. So even if your employer is co-operative in helping you finance the PAYE that you have to reimburse, this tax rule will screw you.

[starstruck]

Sort of, yes.[INDENT][INDENT]
The budget did not mention this. Yesterday's Finance Bill prevents an end-user who was not the actual employer (e.g. the NHS in the case of a nurse) from having to pay the PAYE.

I was referring to this part of the budget.

https://www.gov.uk/government/public...further-update

" The changes will also ensure the liabilities arising from the loan charge are collected from the appropriate person where the employer is located offshore"

.. and what about when the employer is onshore? I assume this covered by a different part of the legislation. Just wondering where that bit is.

EDIT - also for the avoidance of doubt is the employer the company you had an employment contract with, who was detailed on your tax return with a PAYE reference, who sent you payslips and deducted PAYE and NI and sent you P60s etc. or can the revenue decide it is randomly someone else? If it is the first then I can reasonably determine if the employer still exists or not.

[ConfusedEasily]

Trolls?

I'm a bit new to all of this, so excuse the paranoia.

Is HMRC active on these forums?

[starstruck]

Most definitely yes!

[ConfusedEasily]

Most definitely yes!

Would it be possible that the nudge unit may be posting on here?

[davedavis]

Would it be possible that the nudge unit may be posting on here?

Yeah.. Pretty easy to spot