National Employment Taxes Forum Update April 2011

April 13, 2011 2011

birmingham canal

The latest biannual meeting of employment tax experts took place yesterday in Birmingham which was again attended by our Brian Rudkin.

All day meetings are not usually for the faint hearted but Brian says that the forum meetings are normally very interesting and lively sessions (and not just a 'jolly' out of the office !) and yesterday's meeting was no exception with some good debate around topical employment tax issues.

Some of the points we feel able to share with our clients and readers that were discussed include:

  • Whether there is any possibility to persuade HMRC to revisit their decision to abolish relief for late night taxis. The common view, especially with city based advisors and employers, is that abolishing this relief makes little sense and any perceived abuse could be better tackled by amending/simplifying the existing rules instead of completely abolishing the relief as intimated in the Budget. .
  • All eyes will be on the Weightwatchers tax case when this comes back to the Tax Tribunal in October as this is such a significant case both in terms of the potential settlement (last reported to be circa £26m at stake) and also because the decision could be extremely important in settling future cases of employment status disputes. Another case to look out for later in the year will be the Total People one involving NIC on car allowances following HMRC's successful appeal against the Tribunal's original decision. No date has been set for this yet though.

  • The general consensus is that most employers, and a number of childcare voucher providers, are not yet up to speed with the new rules in restricting tax relief to basic rate for employees taking up childcare vouchers on or after 6 April. The legislation and guidance offered by HMRC in relation to doing an Earnings Assessment is too vague at the moment and open to different interpretation and it remains to be seen how this will work in practice, especially when HMRC look at the arrangements as part of a PAYE review.
  • Despite some recent noise from HMRC that legal fees paid by an employer for an employee entering into a compromise agreement would no longer qualify for relief, it is understood that HMRC has now backed down from this stance and that this will be formally announced by HMRC in due course.
  • There is growing evidence that HMRC are raising more challenges around the validity of the £30k tax exemption in relation to terminations of employment where the employee has benefited from the exemption previously with the same, or associated, employer, e.g. where a payment was made for a job being downgraded prior to the employee being made redundant.
  • There are serious concerns around how HMRC is currently coping with PAYE correspondence following the recent move to centralise the majority of PAYE compliance matters to an office in Newcastle. Reports from the forum suggest that there is something like a 6 month delay at the moment for matters such as dispensation requests, termination clearances and other matters which clearly is not acceptable.



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