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Tax treatment of termination payments: changes from April 2018 hit employers again

The UK Government is altering the tax treatment of some termination payments for exits taking effect on or after 6 April.  These changes are the product of the HMRC’s grotesquely misnamed Simplification of the Tax and NI Treatment of Termination Payments consultation paper in August 2015.  The worst excesses of this have come off in the … Continue Reading

Unclear and present danger – incorrect use of “Independent Contractor” arrangements may have expensive consequences

The ever-vexed question of whether a worker is an employee or independent contractor has once again come before the Australian courts. The recent decision of Balemian v Mobilia Manufacturing Pty Ltd & Anor provides a reminder to employers of the potential financial ramifications of getting this wrong.… Continue Reading

New HMRC IR35 status tool reviewed

Last week HMRC launched an online tool to help decide whether an individual is employed or self-employed for tax purposes (not whether he is a “worker” for employment status purposes, which is a separate question which HMRC isn’t bothered about). The tool is here online tool. You answer some questions, turn a metaphorical handle and … Continue Reading

UK Budget changes to severance payment tax treatment

We don’t yet know what lessons, if any, the Government took from the serial savaging by all sides of its disastrous consultation document on reforming the tax treatment of severance payments https://www.employmentlawworldview.com/uk-government-consults-on-tax-treatment-of-severance-payments-do-you-want-the-bad-news-or-the-bad-news/. It has not published any response to that feedback, but we can probably take some short-term clarity in this area from yesterday’s Budget. … Continue Reading

Practical tips for settling injury to feelings claims

Back in 2014 we posted a piece on Moorthy –v- HMRC https://www.employmentlawworldview.com/taxing-times-for-uk-discrimination-claimant/, a case looking at the taxable status of payments to employees for injury to feelings caused by unlawful discrimination. Historically there had been an unspoken understanding that such compensation could be paid tax free, on top of the usual £30,000 allowance for termination … Continue Reading

UK Government consults on tax treatment of severance payments. Do you want the bad news or the bad news?

I know that over the years we have said some pretty harsh things in this blog about assorted government proposals and consultation exercises, but I take it all back.   There is a new kid in town, the HM Treasury/HMRC consultation document on Simplification of the Tax and National Insurance Treatment of Termination Payments https://www.gov.uk/government/consultations/simplification-of-the-tax-and-national-insurance-treatment-of-termination-payments and … Continue Reading

The beginning of the end for personal service companies in the UK?

HMRC issued a consultation document on 17 July 2015 to explore options for tightening up IR35, the intermediaries legislation that aims to tackle tax avoidance through disguised employment. IR35 requires individuals working through an intermediary (e.g. a personal service company (PSC)) to pay broadly the same tax and NICs as any other employee, where they … Continue Reading

Fifty Shades of Grey area – it’s prostitution for tax reasons, virtually

In Poland the Tax Office operates a system whereby you can seek prior confirmation of the tax treatment which would be applied to any proposed business activity.  One such application has recently hit the press, partly because of its subject matter and partly because of the sheer degree of prior consideration which had clearly gone into … Continue Reading

UK Autumn Budget Statement 2014 – salary sacrifice

Within the detail of the Autumn Statement yesterday, George Osborne said measures would be taken to prevent, “payments of benefits in lieu of salary”. HM Treasury also said that tax relief would be prevented on reimbursed business expenses where they are paid in conjunction with a salary sacrifice scheme. Not unusually, it is unclear at … Continue Reading

Taxing times for UK discrimination claimant

The recent Tax tribunal case of Moorthy v HMRC considered the well-known Section 401 ITEPA 2003 which, together with Section 403, makes taxable payments over £30,000 which are directly or indirectly in consideration of the termination of employment.  It also looked at the rules allowing compensation for injury to feelings caused by unlawful discrimination to … Continue Reading

Reed Employment PLC –v- HMRC

For any employer the ramifications of the Upper Tier of the Tax and Chancery Chamber upholding the decision of the First Tier in Reed Employment PLC –v- HMRC are worth consideration. You will remember that Reed provided daily travel and subsistence for 500,000 of its temporary workers under a salary sacrifice arrangement over the period … Continue Reading

New UK tax rules on dual/split contracts

From 5 April 2014 HMRC intends to target contrived arrangements which create “artificial divisions between the duties of a UK employment and an employment overseas in order to obtain a tax advantage”. The new legislation is expected to bring in £245m over the next 4 years. It remains unclear why such new legislation is even … Continue Reading

Interagency Snafu Delaying Issuance of Tax ID Numbers in Russia

This is an article from the Moscow Times on 14 March 2014, quoting Squire Sanders’ Anastasia Melnikov, Moscow.  It is a heads-up to any employer proposing to apply for a work permit for Russia.   A lack of coordination between two government agencies concerning taxpayer identification numbers is creating difficulties for some foreigners trying to get a Russian work permit. … Continue Reading

The UK “bump plan” – when childbirth is a bonus

Readers may have been seen BBC1’s Panorama programme earlier this week, which touched, amongst other things, on the so-called “bump plan.” Details of this entirely legal tax strategy came to be heard in unfortunate circumstances for a very highly regarded member of the tax profession, who has subsequently resigned his position on the GAAR panel- … Continue Reading
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