I have a client who is a UK based employee but the company he works for is overseas, so therefore no tax and NIC deducted from his pay.
I think I am right in saying that he must set up an employers scheme and pay over the deductions himself quarterly. However they have been operating like this for some years now and completing a SA return, which obviously takes care of the tax but not the NIC.
Can ESC A19 be extended to NIC or is there something similar so that the IR cannot claim back several years of unpaid class 1?
Many thanks in advance for your help and advice.
Jo Harris
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O/S aspects.
I saw this posting bereft of replies, perhaps I can spur some for you.
I believe there's some sort of requirement that the company have a physical presence in the UK? This may be a treaty issue, so it is probably relevant which country the employer is located in. There may be a tantalization agreement which may eliminate the need for NIC to be deducted as well.
When the company does meet whatever these physical presence guidelines are, a Modified PAYE scheme can be set up. It's the employer's responsibility to ensure this is done, not the employee's. You need to start an engagement letter with them, not the employee.
There may be many other corporate issues to haggle over besides PAYE and NIC. The company may have an obligation to file corporate UK returns for the UK income generated by its physical presence here. There may be uncharged VAT. If you are unfamiliar with international corporate taxation, you might want to work in tandem with a colleague who is.
Lastly, regarding the fact that this has been going on for years: If you were his accountant this whole time, you may be facing some amount of malpractice for not mentioning the problem sooner. Be sure your professional indemnity insurance premiums are up to date, and offer enough "free" assistance so that they don't notice you hadn't done so before.