It looks as if the new draconian Clause 22 of the 2013 Finance Act, directly targets the number of interim (fee earning) senior officers contracted by Peterborough City Council, ( and commercial companies too.. ) and they are about to lose their prized IR35 tax status and be redefined for tax purposes, as employees, paying income tax and national insurance like everyone else. Not just collecting untaxed fee cheques, and processing them through a Limited Company and drawing dividends, in effect paying just a fraction of the income tax and national insurance, than a PAYE employee on the regular payroll would hand over each month.
It'll hit the PCC particularly hard as key posts in social care and childrens services are almost exclusively run by a number of interim contract personnel enjoying this prized IR35 status. In short, the new post Clause 22 deal offered by the PCC won't be so attractive and some interim officers might just decide to walk.
From the: Finance Bill 2013
CLAUSE 22: ARRAGEMENTS MADE BY
ARRANGEMENTS MADE BY INTERMEDIARIES
1.Clause 22 amends Chapter 8 of Part 2 of the Income Tax
(Earnings and Pensions) Act (ITEPA) 2003 – the
intermediaries legislation (commonly known as IR35) to
extend the application of this chapter to office holders. As an
office holder is not considered to be an employee, prior to
this amendment, an office holder engaged via an intermediary
would not come within this legislation.
CLICK ON 'READ MORE' ICON BELOW
DETAILS OF THE CLAUSE
2.Subsection (1) replaces subsection 49 (1)(c) of Part 2 of
ITEPA 2003. It extends Chapter 8 of Part 2 of ITEPA 2003 so
that it applies to office holders when they are engaged
through a third party intermediary. The extension applies both
where the worker is named as an office holder of the client
but paid through an intermediary and where the intermediary
(third party) is named as the office holder of the client. It
applies in each case where the worker would be considered as
an office holder of the client if the services were provided
directly under a contract between the worker and the client.
In the situations described above, providing there is also a
requirement for the personal service of the worker, this clause
brings into charge for income tax, as the worker’s deemed
earnings from employment, any payment
3.The intermediaries legislation in Chapter 8 of Part 2 of ITEPA
2003 considers the underlying nature of the relationship
between the worker and the engager; if this relationship
would be considered to be employment, if it were not for the
interposition of the intermediary, then the legislation applies.
Where the intermediaries legislation applies, the income
received by the intermediary (third party) is deemed to be
employment earnings of the worker and the worker is liable
for income tax on it, calculated in accordance with Chapter 8.
4.This change equalises the tax treatment of office holders
engaged through third parties with the treatment under the
relevant National Insurance legislation, under which they are
already in the same position as individuals who would be in
an employment relationship if engaged directly.
5.Section 5(3) of ITEPA provides a non-exhaustive definition of
the term “office”, which applies to this clause. It states that
“office” includes in particular any position which has an
existence independent of the person who holds it and may be
filled by successive holders. It is based on guidelines derived
from case law: see in particular Great Western Railway
Company v Bater (1922) 8 TC 231 and Edwards v Clinch
(1981) 56 TC 367. However, since these are only guidelines,
any explanation can only be non- exhaustive. An office is a
separate and independent position to which duties are
attached; an office does not owe its existence to the
incumbent or the discretion of an organisation. For example,
the post of manager of a factory or a head of division in an
organisation is not an office because such a post will
normally only exist as long as the organisation wishes. It will
not have the independent existence or endurance required to
establish it as an office.
POLICE 101, Emergency 999, Crimestoppers 0800 555 111, PBOROtrib NEWSDESK 01733 345581, E&OE
FEED (PASTE THIS LINK) http://feeds.feedburner.com/ParkFarmNeighbourhoodNewsTel01733345581PeterboroughcambridgeshireUk