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HMRC has published a set of FAQs dealing with national insurance
contributions (NICs) on amounts subject to income tax under Part 7A
of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003).
This is the legislation that taxes payments made to employees by
third parties and is often referred to as the "disguised
remuneration" legislation. A copy of the FAQs can be found
here.
Copies of our previous e-alerts on disguised remuneration can be
found here.
There are some potential areas of difficulty when applying NIC
legislation in this area and the FAQs highlight and explain some of
these, including:
As there is no remittance basis for NICs, NICs and PAYE are not
always applied to the same amount where the individual is subject
to tax on the remittance basis (FAQ 10).
There is no direct equivalent in the NICs regulations to
section 554Z13 of ITEPA 2003, which prevents further income tax
charges on certain "later events" following a relevant
step taxed under Part 7A. Although paragraph 2A in Part 10 of
Schedule 3 to the Social Security (Contributions) Regulations 2001
may prevent double NICs charges in some circumstances (FAQ12).
It is a long-standing principle of the NIC system that Class 1
NIC is not refunded unless the NIC has been paid in error and
therefore NICs relief is not available even where income tax relief
can be claimed in respect of a Part 7A charge (FAQ13).
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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If you are an individual moving to the UK your UK tax treatment will depend on whether you are "resident", "ordinarily resident" or "domiciled" in the UK.
The Government is consulting on how to change two aspects of the partnership tax rules in order to prevent tax loss arising from disguised employment relationships through limited liability partnerships and from certain arrangements involving the allocation of profits and losses among partnership members.
George Osborne has written to the Irish Minister of Finance in preparation for the G7 Meeting on 14 May in Dublin, concerning the shared agenda on tackling global tax evasion and avoidance.
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