Offshore employment intermediaries – New Consultation and Isle of Man Disclosure

We recently wrote about Payroll Schemes and the Isle of Man Disclosure Facility with regard to agency workers and related workers, who may have entered into arrangements to try to reduce their tax burdens through payroll schemes in the Isle of Man.

As we mentioned, HMRC have been cracking down on these schemes for a number of years and have recently released a consultation document dealing with offshore employment intermediaries.

The proposals would mean that, in addition to the existing rules (which HMRC acknowledges already place responsibilities on UK businesses for PAYE and NICs), new rules would be created to try to counteract such avoidance.

The current proposals suggest that the tax would be met by the intermediary directly providing the services, or failing that from the end client.  Such proposals would mean that the worker would not have to suffer the liability themselves, however it remains to be seen if the proposals will remain as they are.  Lobbying from bigger businesses could see provisions more in line with IR35, which taxes the personal service company and therefore the worker, so clients should continue to monitor these developments.

Individuals concerned about their potential liabilities should consider coming forward under the Isle of Man Disclosure Facility if applicable, as this can provide big reductions on penalties, as well as providing peace of mind.  Please get in contact with us if you are concerned that you could be caught by the existing or proposed rules.

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