Member Article

Foreign worker tax warning for employers

Employers are being warned of changes brought in by the tax man to reduce lost revenue from foreign workers. The rules are set out within new legislation relating to ‘Offshore Employment Intermediaries’.

Tees Valley chartered accountants and business advisers Waltons Clark Whitehill say employment costs for businesses using foreign agencies could be set to rise because of the new rules.

Previously, Her Majesty’s Revenue and Customs (HMRC) may have missed out on tax and National Insurance contributions from workers brought into the UK via agencies based abroad.

However, employers must be aware that, if the agency is not collecting UK tax and National Insurance for HMRC, then it is now their responsibility to do so.

George Hardey, Senior Tax Manager at Waltons Clark Whitehill, in Hartlepool, said: “HMRC is acting to stop businesses using foreign agencies and workers in this way, without paying the correct duties. It isn’t only the employee who will find their take-home pay reduced by this change. Employers will be faced with the prospect of paying their own contributions, and if there are multiple individuals employed in this way, it could stack up to a significant monthly increase in cost.

“For employers, we are looking at an additional 13.8% in their National Insurance alone as well as the administrative burden of processing the payroll for the additional workers. The rules have been introduced with effect from 6 April 2014 and have not yet really hit the headlines therefore I would advise businesses who may be effected to get immediate advice on this from a tax expert. It may also be prudent for them to use this as an opportunity to consult employment advisers regarding any other responsibilities which may fall on them.”

www.waltonscw.co.uk

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This was posted in Bdaily's Members' News section by George Hardey .