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Public sector off-payroll rules

03 October 2018 / Dave Chaplin
Issue: 4666 / Categories: Comment & Analysis
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Sinner or scapegoat

KEY POINTS

  • Are contractors responsible for a perceived tax shortfall?
  • The new rules for public sector off-payroll working.
  • The hirer will be liable to pay employer’s class 1 National Insurance contributions.
  • A comparison of employer and worker liabilities.
  • Will contractors pass on their National Insurance costs?

HMRC has long used contractors as scapegoats for its perceived tax shortfall portraying them as tax avoiders. However if a contractor is caught by the off-payroll tax which is new legislation inserted in ITEPA 2003 Pt 2 ch 10 (‘Off-payroll working in the public sector’) the hirer must pay employer’s class 1 National Insurance contributions on top of the income paid to each contractor. In other words this liability is calculated in the same way as it would be...

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