Expenses:
It is proposed that an intermediary should be allowed
to deduct the following expenses from payments in respect
of a relevant engagement in calculating whether any
deemed payment is required:
- all expenses otherwise eligible for deduction
under the normal Schedule E expenses rule (S198 ICTA
1988): ie qualifying travelling expenses and those expended
wholly, exclusively and necessarily in the performance
of the duties of the employment (guidance on
the expenses rules is included in Inland Revenue booklets
480 and 490 (available on the Internet at www.inlandrevenue.gov.uk))
;
plus
- any employer pension contributions
made to an approved scheme which are allowable under
normal rules;
plus
- a further flat rate 5% of the gross payment for
the relevant contract to cover other miscellaneous
expenses, such as running costs of the intermediary;
- the
amount of employer’s NICs paid during the
year, plus any due on the deemed payment.
Failure cases:
Where an intermediary fails to deduct and account for
PAYE/NICs on payments to the worker under the new rules,
the normal penalty provisions for employer failures will
apply. If the intermediary does not meet its obligations
to account for PAYE/NICs then the amount may be collected
from the worker - as happens in certain circumstances
under existing PAYE and NIC legislation.
Details of the
tax and NICs consequences, where the legislation does
apply, were announced in September 1999, and can be
found on the Inland Revenue website at www.inlandrevenue.gov.uk/ir35
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