The dangers of intermediaries
Alistair Kendrick (‘Unlawful deductions’, Taxation, 6 February 2025) draws attention to the dangers of intermediaries trying to pass on employer National Insurance contributions to their workers, rather than paying them themselves and making sure that they charge their clients enough to cover the bill.
There is, in fact, a provision of National Insurance law to stop this happening, in addition to what the employment tribunal might decide. This is to be found in paragraph 3A of the Social Security (Contributions and Benefits) Act 1992, Sch 1, the beginning of which reads quite simply:
‘A person who is or has been liable to pay any secondary class 1 or any class 1A or class 1B contributions shall not:
a) make, from earnings paid by him, any deduction in respect of any such contributions for which he or any other person is or has been liable;
b) otherwise recover any such contributions (directly or indirectly) from any person who is or has been a relevant earner; or
c) enter into any agreement with any person for the making of any such deduction or otherwise for the purpose of so recovering any such contributions.’
David Kirk MA FCA CTA,
director, David Kirk & Co Ltd.
Income tax self-assessment enquiries
Andrew Hubbard’s editorial ‘HMRC takes too long to close enquiries’, Taxation, 27 March 2025 hit a raw nerve. I deal with film partnership enquiries and settlements. This case is not alone, but I am dealing with a 2005 partnership return enquiry opened in 2005 and closed in 2010 with a denial of all losses on the grounds that the limited liability partnership (LLP) was not trading. After closing the enquiry HMRC did not even issue partner notices under TMA 1970, s 28B(4).
This has had a knock-on effect because HMRC proposes, pursuant to a settlement proposal, to charge interest for the whole period. While the negotiators are angling for interest remission, HMRC in response to my own enquiries in a similar case say that the taxpayer should have expected an enquiry and possible adverse result and should have made a payment on account at the outset. Since interest remission is discretionary there may not be much that I can do, but maybe the proposed reforms of the enquiry system should legislate for a code for interest remission.
One other enquiry matter, apparently not discussed in the call for evidence, concerns the interaction between TMA 1970, s 9ZA and s 9B. HMRC’s position is that the 12 month time limit for amendment by the taxpayer applies even when the return has been enquired into. In an example similar to the one above, there were open enquiries for 2009, 2010 and 2011. The client discovered that he had been overtaxed for those years and filed amendments, only to be told by HMRC that he was out of time, even though HMRC can take as long as it likes to conclude an enquiry.
R David Rangeley FCA.
Jaffa cakes
This is a follow-up to Andew Hubbard’s editorial ‘Immortality through Jaffa Cakes and VAT’ concerning the late John Brown – who successfully argued that Jaffa Cakes are a cake at the tribunal (Taxation, 26 September 2024).
John told me that at the tribunal hearing he produced a cake-sized (rather than biscuit-sized) Jaffa cake which he called, after the conductor (who alas by coincidence died that same day), Max Jaffa. The tribunal fell about laughing. He was pretty clear he’d won at that point.
Erica Stary,
past master of the Worshipful Company of Tax Advisers and former ATT president.
