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31st January 2012
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Scottish PAYE Umbrella Contractors are in Demand - More Atlantic News
13th August 2010
By using this technique, it was possible to allow these firms to escape paying the full amount of National Insurance (NI) contributions, but new legislation aims to close this loophole.
As a result of a consultation by the Treasury on this issue, new legislation is to be introduced that will take effect from January 1st 2011 and will prevent unscrupulous firms from exploiting this technique.
This expenses loophole appears to have no detriment to the contractor immediately but can actually impact on them later on.
Jonathan Hughes, board member of the A-EMC and managing director of Atlantic Umbrella, believes that the new proposed legislation is in contractors' best interests as full contributions towards future state benefits and pensions would be safeguarded. At present, this loophole leaves contractors at risk.
He said that, further to the above announcement, it is the A-EMC's belief that action is being contemplated and will be taken against Employment Benefit Trusts (EBT's) as these are quite clearly, from a HM Revenue and Customs (HMRC) point of view, a device for "the underpayment" of PAYE and NI contributions. Contractors are at risk of a potential 300 per cent fine from HMRC plus full repayment of the outstanding monies, he warned.
Mr Hughes added: "There is an old maxim - if you eat, sleep and work in a country, you should pay the taxes of the country."
Loophole closure ''shows importance of using reputable umbrella companies''
A hard line is being taken on those umbrella companies who breach minimum wage laws.
By using this technique, it was possible to allow these firms to escape paying the full amount of National Insurance (NI) contributions, but new legislation aims to close this loophole.
As a result of a consultation by the Treasury on this issue, new legislation is to be introduced that will take effect from January 1st 2011 and will prevent unscrupulous firms from exploiting this technique.
This expenses loophole appears to have no detriment to the contractor immediately but can actually impact on them later on.
Jonathan Hughes, board member of the A-EMC and managing director of Atlantic Umbrella, believes that the new proposed legislation is in contractors' best interests as full contributions towards future state benefits and pensions would be safeguarded. At present, this loophole leaves contractors at risk.
He said that, further to the above announcement, it is the A-EMC's belief that action is being contemplated and will be taken against Employment Benefit Trusts (EBT's) as these are quite clearly, from a HM Revenue and Customs (HMRC) point of view, a device for "the underpayment" of PAYE and NI contributions. Contractors are at risk of a potential 300 per cent fine from HMRC plus full repayment of the outstanding monies, he warned.
Mr Hughes added: "There is an old maxim - if you eat, sleep and work in a country, you should pay the taxes of the country."
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