Connecting to LinkedIn...


JSA supports Government announcement on tax avoidance clampdown

JSA supports Government announcement on tax avoidance clampdown
JSA, one of the leading PAYE umbrella and limited company service providers, has come out in full support of the recent announcement by the Exchequer Secretary to the Treasury, David Gauke, of a number of proposed changes to legislation to tackle tax avoidance, including disguised remuneration.
Some of the changes announced have been implemented immediately, whilst others have been put forward for further review. Together, these announcements will protect forecast revenues estimated at up to 5billion over the next 4 years, and are expected to raise over 2billion in additional revenue during the course of this parliament.
The Government is keen to tackle arrangements involving trusts which seek to avoid or defer the payment of income tax or National Insurance Contributions (NICs). Contractors currently using trusts and other financial vehicles as tax avoidance schemes, such as Employee Benefit Trusts (EBTs), may now find their income subject to income tax and NICs.
The Treasury has published draft legislation of an amendment to the Income Tax (Earnings and Pensions) Act 2003, called Employment Income through Third Parties. This legislation is designed to tackle the issue of disguised remuneration and is due to be introduced as part of the Finance Bill 2011. The rules also contain anti-forestalling provisions which means that from 9 December 2010, contractors who are using EBTs will now see a rise in their tax bills.
According to the Treasury, the legislation will ensure that where a third party makes provision for what is in substance a reward or recognition or loan in connection with the employees employment, an income tax charge arises. The Treasury estimates that 5,000 employers and 50, 000 workers, many of them contractors, will be affected, as it is expecting that many such schemes will be discontinued.
Once contractors and others who use schemes such as EBTs are unable to gain any financial benefit from them, it is very likely that limited and umbrella company solutions will see a surge in popularity among ex-EBT contractors.
The Government is already committed to reviewing IR35 and small business tax generally via the Office of Tax Simplification (OTS).
Jonathan Margrave, Head of Sales and Marketing at JSA, said: Disguised Employment and Remuneration has been prevalent within the contracting industry for some time now and I am delighted to see that HMRC are now tackling directly those providers who promote their services to contractors as tax avoidance specialists.
JSA is renowned for providing compliant solutions to UK contractors and I am pleased to see that the field will now be leveled accordingly.  I fully expect to see a marked increase in the take up of Umbrella and Limited Company Services (PSCs) as a result of this direct action.  With our product portfolio here at JSA, we are well positioned to give the balanced and specialist advice that contractors need regarding which model best suits their personal circumstances.


Articles similar to

Articles similar to