Offshore Employment Intermediaries – latest Government proposals

The original consultation document “Offshore Employment Intermediaries” was published on 30 May 2013 and following HM Revenue & Customs (“HMRC”) review, the Government’s latest proposals were published in a “Summary of Responses” document dated 14 October 2013.

Latest position – general overview

Generally, under the revised proposals drawn up, where the offshore employer contracts to provide services of UK based staff to an UK intermediary company that in turn has a contract with an end user client, the employer’s obligations to account under PAYE for tax and NICs will be given to the UK intermediary company. HMRC has amended its original proposal that would have made the end user of any labour potentially responsible for meeting these PAYE real time reporting obligations, if both the offshore employer and intermediary defaulted. However, where there is no UK intermediary company, the end user of the labour will be responsible for accounting for and paying UK employment tax and NIC.

A separate proposal has been developed for the oil and gas sector, involving a certification scheme for offshore employers.

The main winners from these amendments are the end users as under the previous proposals, they were faced with considerable uncertainty as to whether and when they might become liable to account for tax and NICs, whilst often lacking the information needed to assess the risk and meet these compliance obligations.

This latest HMRC document responding to the “Offshore Employment Intermediaries” does give some indication as to where the PAYE and NIC liabilities will lie, but relevant parties will only be able to finalise their arrangements and determine how any increased costs should be apportioned going forward once the full detail of all relevant regulation is published over the coming months.

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