CIOT: Abusive PAYE schemes – low income workers must be protected

The Low Incomes Tax Reform Group (LITRG) has welcomed the Government’s commitment – announced today – to consult on how best to ensure that offshore employment intermediaries pay the right amount of tax and NIC on the pay of the employees on their books. Draft legislation is expected in the 2014 Finance Bill.

LITRG Technical Director Robin Williamson commented:

“It is not unusual for employers to delegate their payroll obligations to intermediaries, some of whom may be based offshore. Some intermediaries account for tax and NICs properly, but others engage in imaginative, sometimes even abusive, schemes which result in tax and NICs being avoided.

“The Exchequer loses out from such schemes, but the real victims are the workers themselves. They often have no real choice but to accept offers of work even if the terms look unacceptable to them. If they refuse work, their may be sanctioned by the Department for Work and Pensions and their benefits withdrawn; if they accept, they may face investigation by HMRC years later, particularly if HMRC cannot get at the employment intermediaries.

“We trust that the protection of these low-income workers will be a paramount concern in the consultation.”

Notes for editors

The Low Incomes Tax Reform Group (LITRG) is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.

The CIOT is a charity and the leading professional body in the United Kingdom concerned solely with taxation. The CIOT’s primary purpose is to promote education and study of the administration and practice of taxation. One of the key aims is to achieve a better, more efficient, tax system for all affected by it – taxpayers, advisers and the authorities. The CIOT’s 16,500 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’.

George Crozier
External Relations Manager

D: +44 (0)20 7340 0569
M: +44 (0)7740 477374

The Chartered Institute of Taxation
Registered charity number 1037771
www.tax.org.uk

The Association of Taxation Technicians
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www.att.org.uk

Low Incomes Tax Reform Group – an initiative of the Chartered Institute of Taxation
www.litrg.org.uk

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