Commenting on the consultation document on tackling tax avoidance via the use of offshore employment intermediaries issued today by HMRC, Punam Birly, Tax Partner at KPMG in the UK, said:
“HMRC’s estimate that there is £90m of tax at stake here is just the tip of the iceberg. The changes announced today have potentially sweeping and wide-ranging effects across a whole raft of employers, most notably in the health, education and oil and gas sectors.
“Today’s consultation increases HMRC’s powers to enforce payment of PAYE and NIC where staff are provided in the UK by ‘offshore employment intermediaries’ and also makes the end-user of staff, or ultimate employer, responsible for any outstanding employers’ NICs that are owed.
“Given the complexity of the supply chains involved in providing staff such as teachers, nurses and oil and gas workers, there is a very real possibility that some ultimate end users who benefit from these individuals are unaware that they are even using agencies relying on an ‘offshore employment intermediaries’ exemption or that they have any exposure to these significant NIC liabilities. It is crucial that these companies urgently review their staff supply and commercial arrangements to gauge their exposure and in some cases, determine who will pay these increased costs as well as take responsibility for the increased administrative burden the changes will bring! If no-one in the supply chain pays the tax bill, ultimately the end-users may well be liable.
“Today’s measures are more about practicalities than technicalities to a large extent. There are already a range of anti-avoidance rules in place. However these changes are not only about the technical application of the rules but the practicalities of HMRC enforcing the payment of Tax and NIC in countries outside of the EU where they don’t have jurisdiction to operate. In this respect, the UK is becoming more consistent with other EU Tax authorities which pursue the taxpayer linked to the offshore employer in the event that the offshore employer fails to meet its employer obligations.”
For further information please contact:
Margot Cowhig, KPMG Corporate Communications
Tel: 0207 694 4246 Mobile: 07920 274856: email@example.com
KPMG Press Office: 0207 694 8773
Notes to editors
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.