Offshore employment intermediaries' income put under review

HMRC is consulting until 8 August 2013 on proposals to ensure the correct income tax and NICs are paid by offshore employment intermediaries. The consultation sets out government plans to create an income tax and NICs charge on offshore intermediaries employing workers in the UK and if the employer fails to pay, moving this charge to an onshore engager of the labour, in specified circumstances. The policy is scheduled to come into effect in April 2014.

Commenting on the proposals, Jon Robinson, senior associate at Pinsent Masons, said: ‘The mischief at which the proposals are aimed is clear – it cannot be right that tax and NICs in respect of UK residents working exclusively in the UK for a UK end client be escaped. However, businesses will be concerned over whether genuine commercial and non-abusive arrangements could be caught. There will also be concern over the scope of the proposals to make end clients liable where HMRC is unable to make recovery from the intermediary: HMRC itself acknowledges that end clients often do not know that an offshore structure is being used to provide their workers.’