Hmrc employer handbook e14

The following are basic definitions of whether a PA is employed or self-employed:. Employed - If you are employing your assistant, they are likely to depend on you for some or all of their regular income, and will be entitled to sick pay, holidays and a notice period for example. This makes a significant difference to your relationship with them and your own personal responsibilities. Self-employed - If your assistant is self-employed you may be paying for services provided by the hour or by the job, on a regular basis or not.

They will decide when they are able to work and what they are able and willing to do. You simply pay the bills as they come in and have no responsibility for the sick pay, holidays or National Insurance payments of the people who come to work for you.

These are taken care of by the person doing the work, or the business which employs them. Generally speaking, if you require your PA to carry out tasks or perform services for you in the following circumstances, they will be your employee rather than a self-employed person:. Your PA 's employment status will be based on the circumstances of your support. If you are thinking about buying your support from a self-employed PA you should contact your local support organisation.

Here is an outline of what you need to do to set up and run your payroll. UK website. There are also certain statutory payments you may have to make from time to time which you need to be aware of. These include:. A vast amount of information is available on the GOV. If requested HMRC will send you several booklets and tables to enable you to make the relevant deductions and payments to your employees. Employers, or their agents, are generally required to make regular online payroll submissions for each pay period during the year detailing payments and deductions made from employees on or before the date they are paid to the employees.

More detailed guidance and information on operating your payroll under Real Time Information can be found here or in our Payroll Real Time Information factsheet. The tax due for a particular employee is calculated by reference to their gross pay with a deduction for their tax free pay which reflects their particular circumstances using their coding notice and the pay date. More information can be found in the Compliance Handbook CH The year time limit within Section 36a of the Taxes Management Act applies for income tax and PAYE where the lost tax involves an offshore matter.

An assessment to recover the under-assessed or over-repaid tax can be made within 12 years of the end of the relevant tax period. This applies as follows:. The year time limit cannot apply to years before to where the income tax including PAYE lost involves an offshore matter.

However, the year time limit continues to apply where tax has been under-assessed or under-declared as a result of deliberate behaviour. Also, the year time limit does not apply for income tax including PAYE where:. More information and an explanation can be found in the Compliance Handbook CH Michael earns the right to exercise share options in the Canadian entity on 30 December and leaves the UK on 6 April becoming resident in Canada.

Michael exercises his share options on 30 September when he is resident in Canada. Sandra is resident and works in Germany for a branch of a UK company, she performs short business trips each year to the UK to carry out work duties.

This is income or assets received in a territory outside the UK. The UK taxable amounts will generally be apportioned for days spent in the UK. Faizan is not resident in the UK and is a US national. This is income arising from a source in a territory outside the United Kingdom. She returns to the UK on 30 September Due to the amount of time she spends in China, her UK employer must register her as an employee with the Chinese Tax authorities and deduct local payroll tax.

The UK employer also agrees to pay any Chinese tax arising on her behalf. Magda therefore remains tax resident in the UK. Although HMRC have deemed the UK employer to have acted carelessly we cannot apply the six-year time limit under Section 36 of the Taxes Management Act as both to and to have now gone out of time.

However, the rules in Section 36A can apply and it is still in time to assess to and to under those rules instead. The same circumstances apply as for Magda in example 4. She does not have any income arising from a source or have any income received in a territory outside the United Kingdom. All her earnings are paid in the UK by her UK employer, and she pays the Chinese tax due out of those earnings.

However, Magda has received earnings in the UK as a result of working overseas. S36A can apply as between 1 January and 30 September she was carrying on activities wholly or mainly in a territory outside the UK. For employer liabilities for outbound employees on assignment outside the UK and for non-resident director liabilities for their visits to the UK employers or agents should send these disclosures to:.

For employer liabilities for inbound foreign nationals on assignment to the UK, employers or agents should not use the Digital Disclosure Service. Instead, you should email the full disclosure to internationaleddisclosures hmrc. Many businesses use recruitment agencies to source temporary workers. These agencies may choose to outsource the administrative burdens of operating HR and payroll for their workers to an umbrella company. Therefore, many temporary workers of a business may be employed by umbrella companies.

HMRC is encouraging all businesses using temporary workers to familiarise themselves with new guidance published this month. This new guidance builds on earlier published guidance providing advice on applying supply chain due diligence and warning about mini-umbrella company fraud.

It focuses on umbrella companies operating tax avoidance arrangements known as disguised remuneration schemes. It offers advice to businesses on how to spot these non-compliant umbrella companies, the risks of engaging with them, and how they can protect themselves and their workers from unintentionally entering into agreements with these companies. Whilst the guidance focuses on umbrella company non-compliance involving disguised remuneration schemes, there are various other ways in which an umbrella company may be non-compliant.

These range from being involved in mini-umbrella company fraud to payroll fraud. The principles and advice included in the new guidance can help protect you against involvement with a range of non-compliant umbrella companies.

Many umbrella companies operate correctly and are compliant with tax rules. The issue lies with those which are non-compliant, including those that operate tax avoidance schemes known as disguised remuneration schemes.

Disguised remuneration schemes try to avoid the need to deduct Income Tax and National Insurance contributions which would usually be due under PAYE on payments made to workers.

To achieve this, non-compliant umbrella companies will deliberately describe taxable earnings received by a worker for doing their job as something else which they claim is non-taxable. This can include grants, salary advances or loans, to name just some examples. This is in an attempt to enable the workers to receive untaxed payments and increase their take-home pay. However, the vast majority of these schemes do not work and many have been successfully challenged in courts and tribunals by HMRC, demonstrating clearly that they do not comply with the law.

Taking this responsibility seriously is a key means of protecting the business from becoming involved in tax avoidance as well as other non-compliant and sometimes fraudulent activities. If a business uses a temporary worker employed through an umbrella company which is operating an avoidance scheme paying its workers without correctly operating PAYE , it leaves itself and its workers vulnerable to lengthy tax compliance checks, tax liabilities and penalties as well as considerable reputational damage.

There are various steps businesses can take to protect themselves and ensure that any umbrella company they engage with is operating correctly and is fully compliant. First, you should consider adding a clause to your contracts with the agencies who provide you with workers requiring your authorisation before the agency sub-contracts with a third party. This will allow you to know who is involved in the supply chain for the worker, and importantly the details of any umbrella company involved.

There are some simple warning signs to be aware of which should at the very least urge a further and thorough investigation of the umbrella company in question, such as:.

It is also recommended that you regularly request payslips from the umbrella companies involved in your supply chains to conduct sample checks.

This will enable you to confirm that PAYE is being operated correctly on the amounts being paid to workers. It is recommended that you request payslips from the umbrella company for specific workers chosen by you and if possible, cross-reference these with payslips requested from the workers themselves to ensure they match. This is just a brief overview of the due diligence checks businesses can take to avoid using umbrella companies operating avoidance schemes.

If you have concerns about an umbrella company in your supply chain you should report them to HMRC. Telephone: Opening times: Monday to Friday: 9am to 5pm Closed on weekends and bank holidays. It is important that you continue to support your employees by meeting your ongoing legal duties. This includes paying the correct amount on time to your staff pension scheme. Make sure you understand what you need to do and by when.

For more information read our employer guidance.