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HMRC addressing gap in offshore NIC tax

HMRC has estimated that a possible £90 million of tax liabilities may be recouped after proposed changes, which would see offshore bosses be, in the initial instance, liable for deducting national insurance contributions (NICs) and income tax from workers through the HMRC Real Time Information System.

If the changes go ahead, offshore bosses will certainly need the services of a reliable tax advisor, regardless of whether they use an accountant in Liverpool, Chester or anywhere else.

For NICs and tax, an offshore employer’s obligations will match those of an employer based in the UK. This includes being liable for statutory payments going to the employee, such as maternity pay and statutory sick pay. Where NICs and income tax have been paid to the MRC, offshore employers will be treated as having met its obligations.

The consultation said:

“The existing legislation has been exploited, particularly in certain sectors, allowing companies who are willing to set up offshore arrangements to gain a competitive advantage over those businesses who play by the rules.

“This new legislation that is proposed is intended to level the playing field and ensure that the correct income tax and NICs is paid in respect of all workers in the UK.”

The consultation is expected to put a stop to such methods of avoidance. Once it has closed, there will be an update to NIC legislation which will include the changes being proposed. Parliament will come face to face with these changes in September.

Posted by Mark
June 11, 2013

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