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Expect to receive a letter from a Hospital asking to confirm that the client is compliant on your letter head whilst simultaneously supplying the name and policy no of your PII......
An excellent summary of the forthcoming problems and impracticalities of the proposals. There are so many reasons why this will not work, even though it has been restricted for now to PSBs. The idea that PSBs, agencies and PSCs can adapt to new rules by next April, rewriting their systems appropriately when there is as yet no specification of what is required, is ludicrous, even if the PSB in question has payroll and AP in the same place. The IT changes cannot happen overnight.
To add another impracticality: HMRC has not yet said how its RTI system will handle the dual payroll record for each PSC worker, beyond promising that there will be no double taxation. The PSC worker will be on his/her own payroll and have a record on that reference under RTI. Each agency or PSB will also have to treat the worker as an employee and operate an emergency code, and depending on how the PSC works these could be numerous. The worker will therefore probably be shown as concurrently employed under several (or numerous, if P45s are not issued to those who may return) employer references, so the allocation of the code(s) will be a challenge. And let's not even start on the NIC position, given that earnings subject to NIC when paid by the PSB will be profit, to be paid out subject to NIC by the PSC. It's odds-on that nobody has even started to think about the rewrite of the NIC regulations to cope with the double charge, or the fact that each PSB will be given an employer secondary threshold in respect of the single actual employment in the PSC.
I'm not sure I agree on the AE pension, though. The worker is technically an employee only of the PSC. The IR35 changes don't affect employment or pension rights, and as a contractor employed by someone else, the worker can't be a 'worker' in AE terms for the PSB or agency. AE catches self-employed contractors who commit to personal service, but PSC directors are not self-employed.
I have to say my money is on deferral until April 2018, or notional introduction in April 2017 with no attempt to police before 2018. All the potential problems that stopped this approach being adopted with IR35's introduction in 2000 have to be addressed, and while IT can do a lot nowadays, it's not Harry Potter.
It's a long time since I calculated a deemed payment but I seem to remember pension and benefits were deducted as well as 5%. So if the PSC wants to support the government's pension initiative and make a £40k contribution to the employee's pension scheme it will reduce the actual deemed payment and the tax and ni due. If the agency or client are only going to deduct 5% before calculating tax and ni they will be working on a higher deemed payment figure so there will be an excess tax credit even if all available funds are paid out of the PSC as salary. Will we be able to adjust his tax code to absorb the excess?