State school teachers employed by tax-avoiding firm

[vetran]

I think it is if ISS is actually working as an umbrella company (holding a ltd company for each worker) not merely as a third party payroll provider for self employed workers engaged directly by the client.

If HMRC pursue the client for unpaid employee tax across a limited company barrier then IR35 which chases the worker because they can't cross the ltd company barrier becomes difficult to explain.

If they are self employed workers directly engaged by the client then the Clients are responsible for any shortfall in tax. Though I suspect if they paid a staff selected payroll company they may have some defence, at least enough to avoid penalties maybe.

AIUI - IMHO and of course IANAL.

[northernladuk]

Worry not, we, Specifically in General, never look in Accounting anyway.

What Zeity said actually. I withdraw that KUATB... Carry on chaps n chapesses.

[MyUserName]

that would be a game changer. I can't see ISS being a self employed organisation so if they are going to break the Limited barrier IR35 is dead going after the contractors.

Sorry, I already know I am being an idiot but could you break that down - why would IR35 be dead?

[vetran]

HM Revenue & Customs says schools, councils or employment agencies could be liable for the shortfall.

that would be a game changer. I can't see ISS being a self employed organisation so if they are going to break the Limited barrier IR35 is dead going after the contractors.
Lets hope HMRC's greed gets the better of them.

[Martin@AS Financial]

KUATB Martin

Thanks Northern Lad - missed that post.

Chaps - please use the above link as this is a repost of the same topic.

Cheers

[Martin@AS Financial]

More precisely, offshore umbrella companies. There's no suggestion anywhere in the story that brollies generally are doing anything untoward, except for the bit where it could give that impression due to a bit of sloppy editing.

Not suggesting that the Umbrella Companies are doing anything untoward by any means. I think the real reason that this has made the news is because it is essentially the government who pays the teachers.

[northernladuk]

KUATB Martin

[DimPrawn]

I'm happy to pay the same percentage tax in the UK as Boots, Google, eBay, Starbucks etc.

http://www.guardian.co.uk/business/s...ding-companies

Boots, another target for UK Uncut after moving its headquarters to Switzerland in 2008. In 2009-10, Boots paid just £14m on profits of £475m, equivalent to 3%.

[alreadypacked]

More precisely, offshore umbrella companies. There's no suggestion anywhere in the story that brollies generally are doing anything untoward, except for a bit of sloppy editing.

+1

[NickFitz]

The general gist of the below is that it looks like HMRC are set to investigate Umbrella Companies.

More precisely, offshore umbrella companies. There's no suggestion anywhere in the story that brollies generally are doing anything untoward, except for the bit where it could give that impression due to a bit of sloppy editing.

[Martin@AS Financial]

The general gist of the below is that it looks like HMRC are set to investigate Umbrella Companies.

(Taken from the BBC website including the headline)




An offshore company employing thousands of teachers is avoiding the payment of millions of pounds in employer's National Insurance contributions.

ISS Ltd, based in the Channel Islands, employs more than 24,000 temporary agency workers across the UK, most of them working as supply teachers.

ISS says it is "meticulous in complying with HMRC codes on taxes and expenses".

HM Revenue & Customs says schools, councils or employment agencies could be liable for the shortfall.

The BBC's 5 live Investigates programme has discovered that thousands of supply teachers working in the UK are paid by Sark-based International Subcontracting Solutions Ltd (ISS).

ISS is a payroll company - sometimes known as an "umbrella" company - which pays the salaries and expenses of workers who find jobs through recruitment agencies in the UK.

The arrangement means that temporary workers, such as supply teachers, are the employees of ISS.

Because ISS is based offshore it does not pay employer's National Insurance contributions - but neither do the UK-based recruitment agencies that find the jobs for staff paid by ISS.

This could add up to many millions of pounds in unpaid tax. For example, for a supply teacher on a daily rate of £160, around £90 per week is not being paid to HMRC in employer's National Insurance contributions.

HMRC says that the UK-based employment agency through which the workers are supplied, or alternatively the end-user company, such as the school or local education authority, could be treated as the employer and therefore be liable for the unpaid National Insurance contributions.

This raises the prospect of HMRC having to pursue other public sector bodies and employees for the lost revenue.

ISS told the BBC that HMRC had no grounds to challenge its employees or business partners.

But the consultancy firm Professional Passport, which advises the recruitment industry on tax issues, says a lack of enforcement has encouraged the growth of offshore umbrella companies.

"We don't need more rules, or different rules, just effective enforcement of the existing rules," Professional Passport director Crawford Temple told 5 live Investigates.

"If these are proving too difficult to enforce then they should be reviewed and amended as a priority," he added.

Director of Tax Research UK Richard Murphy says the growth of umbrella companies is "the next big UK tax scandal".

Mr Murphy told the BBC: "The UK can't afford this tax loss and it can't afford so many households being put at tax risk. This is a scandal waiting to break."

The government also stands accused of having ignored the problem despite warnings.

Professional Passport wrote to Treasury minister David Gauke in July 2011 to point out the "potentially embarrassing" issue of public sector agency workers being employed by offshore umbrella companies.

Mr Temple says he is yet to receive a response.

"Mr Cameron was quick to use moral arguments when celebrities were utilising tax avoidance strategies, yet his own ministers failed to take any action, or even respond, when we highlighted serious tax avoidance issues directly to them on a number of occasions."

HMRC told the BBC that employers had a legal responsibility to operate PAYE and should question very closely anyone offering quick-fix tax and National Insurance arrangements.

"We are actively pursuing a growing number of investigations against these types of arrangements.

"The HMRC has already successfully pursued a number of companies for tax, National Insurance and interest where they were not playing by the rules."