Our website uses cookies to store information on your computer. You may delete and block all cookies from this site, but parts of the site will not work as a result. Find out more about how we use cookies.
(Do not show this message again)
Shout99 - News matters for freelancers
Search Shout99 - News matters for freelancers
(Advanced Search)
   Join Shout99  About Shout99   Sitemap   Contact Shout99 18th Jun 2018
Forgot your password?
Shout99 - Freelancers, FO35, Section 660
New Users Click Here
Shout99 - Freelancers, FO35, Section 660
Shout99 - Freelancers, FO35, Section 660
Front Page
Freelancers' Shop...
Ask an Expert...
Direct Contracts
Press Links
Question Time
The Clubhouse
Conference Hall...
News from Partners


Business Links

Shout99 - Freelancers, FO35, Section 660

Freelancers' Shop

Personal Financial Services
from ContractorFinancials




Income protection

... and more special offers for Shout99 readers in the Freelancers' Shop

Shout99 - Freelancers, FO35, Section 660
Shout99 - Freelancers, FO35, Section 660

News for the
Construction Industry

Hardhatter.com - News for small businesses in the construction industry

Powered by
Powered by Novacaster

HMRC close the net on offshore payment intermediaries
by Susie Hughes at 10:51 05/08/14 (News on Business)
The change in legislation from to place the compliance burden and tax/NI risk on recruitment agencies who pay their contractors via offshore payment intermediaries has been well publicised in recent months.
Perhaps not so well publicised has been HMRC’s focus on identifying and investigating those contractors who have been using such schemes in previous tax years. A recent HMRC announcement indicates that they are now focussing resource on countering this form of tax avoidance which they refer to as 'contractor loan schemes'. (HMRC gives settlement chance to contractor loan schemes - July 14, Shout99)

Specialist contractor service providers, Brookson takes a look at the relevance of this sort of scheme to contractors.......

The attraction to the contractor in using an offshore payment intermediary is easy to understand, take home pay of 90-95 per cent of contract value is often published on the provider's web site.

However, the old adage of 'if something is too good to be true it probably is' is something that is often referenced when advising contractors on whether this is a viable option.

HMRC have been facing an uphill battle to combat this form of tax avoidance (from which they calculate £430 million of tax is owed) where typically a low salary is paid to the contractor which is topped up by a loan which is not subject to tax.

The employment provider is typically based offshore in a tax haven and therefore outside the scope of UK tax or in some cases any form of tax. In some cases the provider may be based in the UK but use a convoluted structure involving offshore trusts to try to conceal the true picture. This has made it hard for HMRC to investigate the offshore employment provider and resource constraints has made it hard for them to target individual contractors.

The recent announcement from HMRC implies that they are now have details of contractors who have used these schemes from 2008 to 2011 and are taking action to recover unpaid tax.

HMRC are writing to over 16,000 contractors (who they believe owe on average £11,000 a year in tax) with an assessment of the tax they believe is due and giving them an opportunity to pay this tax or challenge the assessment via a tribunal and risk the possibility of further penalties.

From April 2014 going forward HMRC will now go to the recruitment agency who placed the contractor to recover unpaid taxes.

It is clear that HMRC are no longer tolerating this form of tax avoidance and are taking direct action to counter it, as they have also done recently with the onshore self-employment intermediaries legislation.

Compliance should remain a key factor for contractors and recruitment businesses alike when selecting a provider to manage their contractor payroll.

Hopefully this type of compliance action will result in non-compliant businesses falling by the wayside, however, many are still trading and selling their services to uninformed contractors and recruiters who may be oblivious to the financial implications.

Appropriate due diligence is now essential throughout the supply chain.

If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'.
Susie Hughes © Shout99 2014

Printer Version

Mail this to a friend

Copyright 1999-2018, Shout99.com | All Rights Reserved
Privacy Notice and Terms of Use