PayStream’s opinion: A roundup of recent compliance activity

Tuesday 21st May, 2013
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Last tax year we saw a crackdown on offshore schemes and strong language from Government and HMRC concerning the use of such schemes. As a result agencies reviewed PSL's to identify offshore providers and attempted to switch contractors to onshore solutions. The agencies met some resistance since the offshore schemes generally deliver a greater take home pay since no NI (and sometimes no tax at all) is paid. The contractors have been given the message that tax isn't optional.

HMRC has also confirmed that 'Pay day by Pay day' models are non-compliant -http://www.hmrc.gov.uk/news/relief-models.htm. Agencies are now removing companies that run such models from their PSL's but are looking for a way to pay lower paid workers. Some companies are promoting self-employed models (to get round national minimum wage issues) where contractors are paid gross (less a fee). This is a risk for contractors since HMRC will not see them as self-employed for tax purposes and for agencies since, depending upon how structured, may see the agency caught by debt transfer rules under MSC legislation. We await HMRC activity in this area.

As compliance activity increases we expect agencies and contractors to gravitate towards service providers that take compliance seriously which can only be good news for PayStream.


Contractors have been given the message that tax isn't optional.