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HMRC's blinkered approach to job creation

4th Jun 2013
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HMRC have gone after firms that take on interns without pay and claiming a breach of minimum wage. The only reason HMRC are managing to get away with it is because these young people have fixed hours, so it seems that the issue is not one of principle but one of technicality . This is a typical situation that pushes creative minds to find loopholes.

Working unpaid for a several months is a fantastic way of giving a young person the vital experience needed to progress. I have witnessed it myself through my employment charity. One of the employers we worked with was a local authority , so here we have joined up government in action.

What we need is t sweep away all the tax rules and have an independent committee that will decide on a case by case basis whether something should or should not have been taxable. In the meantime the tax is paid until such time it is ruled to be refundable .Surely it is much easier than the hotch potch we have now and certainly no less fairer than the current lottery.

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By Roland195
04th Jun 2013 11:53

Is it really?

I believe that the reason HMRC is looking at these "internships" is that they have more in common with employment than the companies involved care to admit. It does not seem unreasonable to me that they should receive a days pay for a days work.

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By User deleted
04th Jun 2013 12:34

But ...

... you have to pay to go to University, why should you not pay to learn business skills?

From an employers perspective, they invest time and money traing people, who once they become adept move elsewhere or set up in competition.

When I ha an intern last summer i did pay hime, but it probabbly cost me a lot more in productivity than I gained from the "cheap" labour.

If an intern should receive a days pay for a days work, should an employer not receive a days pay for a days tuition?

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Norman Younger
By Norman Younger
04th Jun 2013 13:46

Interns

Taking an internship is a choice , a seminal lesson perhaps in risk / reward . As there is no compulsion why should firms pay for something that often is a major drain on time and resources. I have employed many young people over the years and I can testify that a period of work experience prior to issuing a contract of employment is defintiely the best way to go. If they are good enough to earn a contract I usually reward them for the period prior in their first pay packet.

Many firms out there are scared to make the leap into becoming employers often due to cost, never midn the red tape, and internship is a great way to let a young person prove they are worth it

No firm worth their salt wants to use slave labour for a few months and then dump them. It simply doesn't pay

This way it's a win - win situation .

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Replying to IanJF:
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By Roland195
04th Jun 2013 14:15

No-body is saying that genuine internships can't be offered

Flying Scotsman wrote:
No firm worth their salt wants to use slave labour for a few months and then dump them. It simply doesn't pay

The trouble is that the concept of internships is supposedly being abused by the bigger companies to the extent that it is preventing graduates gain employment rather than assisting.

The conditions on which these firms offer "internships" seem remakably similiar to employment contracts with the notable exception of remuneration.  

 

 

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Norman Younger
By Norman Younger
04th Jun 2013 14:20

Assisting and employing

I understand the argument against but graduates are not stupid , well most of them aren't, so if they have a choice of nil experience and nil employment in their chosen field does it not make sense to opt for an internship - they are not bound , they are free to leave .

In the current economic rut we are in the rules of he game have changed . Government should be encouraging this not throttling it. 

The further down the business food chain the more valuable and close to the coal face work experience is. This will leave SMEs running scared

 

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By Knight Rider
11th Jun 2013 13:35

Perhaps we should all be free to choose the terms and conditions on which we are prepared to accept employment without the state imposing a minimum wage/working hours and generally interfering in contracts freely entered into between willing parties.  

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Norman Younger
By Norman Younger
11th Jun 2013 13:53

Terms and conditions

We are free to make such a choice although NMW looks like the thin end of a potentially large and long wedge if unpaid internships can't continue. HMRC need more discretionin applying NMW ,which is clearly there to prevent exploitation , not stifle opportunity 

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By Knight Rider
11th Jun 2013 18:39

Employers(and perhaps interns) would rather have certainty than rely on HMRC discression. My simple understanding is that NMW is payable unless the intern is a volunteer for a charity or shadowing an employee in a profit making organisation.

I suspect that most graduates would rather have an internship for a low or no wage than work in KFC for minimum wage. Without clarification NMW will stifle the graduate's opportunity for the first option.

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Norman Younger
By Norman Younger
11th Jun 2013 19:04

NMW and opportunity

On 2nd thoughts you are probably correct that HMRC discretion is not such a good idea .                                      There are rules that allow for work experience thereby avoiding PAYE altogether , and these give valuable life skill opportunities to people who under NMW would simply not be viable as employees due to learning challenges (that was a PC comment, ouch). It needs to be extended to graduates and such like - if nothing else it makes for a level playing field ! 

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