Legislation

ID and entitlement to work in the UK

SmartPay – Your Identity and right to work in the UK

We must comply with the Government’s requirement that you prove who you are and your entitlement to work in the UK. This can be done by providing us with copies of: –

• A passport showing that you are a British citizen or a citizen of the United Kingdom and Colonies having the right of abode in the United Kingdom, or
• A passport or national identity card showing that you are a national of a European Economic Area country including Switzerland, or
• A passport endorsed to show that you are allowed to stay in the United Kingdom and are allowed to do any type of work or endorsed to show that you are exempt from immigration control, allowed to stay indefinitely in the UK, have the right of abode in the UK, or has no time limit on your stay.

If you are unable to provide one of the above then you will need to provide, clear copies of the following, one document from either List A, B or C and one document from List D together with documentation clearly showing your national insurance number. (i.e. a P45, P60, or National Insurance Card).

We also need a copy of a recent utility bill to confirm your address, this will need to be an official letter, showing your name and the address that you have provided on your application form.

Once we have received copies of your documents, you are able to begin working and enjoy all the benefits of being our employee.

Smart people use SmartPay.

IR35

IR35

What’s it all about?

Put simply the Intermediaries Legislation now known as IR35 relates to the tax rules put forward by the then Inland Revenue (now ‘Her Majesty’s Revenue & Customs’ “HMRC”) to restrict freelance contractors from gaining tax advantages by claiming to be self employed when they are not.

The Intermediaries Legislation was introduced on 6th April 2000; it was first proposed by the Chancellor in the 1999 Budget and details were given in the Budget press release which was called IR35. Following consultation, revised proposals were announced in a new press release dated 23 September 1999, the legislation caused such a stir in that it changed the face of freelance contracting in the UK and it is now commonly referred to as ‘IR35’.

In HMRC’s own words;

‘The aim of the legislation is to eliminate the avoidance of Tax and National Insurance Contributions (NICs) through the use of intermediaries, such as Personal Service Companies or partnerships, in circumstances where an individual worker would otherwise –

• For tax purposes, be regarded as an employee of the client; and
• For NICs purposes, be regarded as employed in employed earner’s employment by the client.’

This means that if you are working through a company as a contractor rather than as a direct employee of a client company and you are providing your services directly to that client company, then the IR35 rules have to be considered prior to deciding how you are paid, ie

• as an employee subject to full employed levels of PAYE and National Insurance (“NI”) – if the way you provide your services indicates that you fall within the IR35 rules; or
• as a self–employed sole trader or a limited company director and shareholder which allows for you to pay beneficial levels of tax and National Insurance.

The rules surrounding IR35 are complex, however, it is very important that they are fully considered and the appropriate pay method is applied to your earnings, as all self employed workers and limited company directors are required to submit a tax return to HMRC. This means that HMRC are fully aware of the working status you are claiming and are able to conduct investigations into your status, if they are not convinced that you are truly in business on your own account, they have the power to make you pay the full amount of underpaid tax and charge additional penalties.

It is imperative that you take your approach to your employment status seriously. Recent case law includes the recent Dragonfly case which considered whether Jon Bessell, the director and owner of Dragonfly Limited, was a disguised employee of his clients business for certain assignments he worked on and therefore working within IR35. The Judge in the High Court found that he was, which resulted in a £99,000 bill for unpaid tax.

SmartPay Umbrella

As a SmartPay employee, you don’t have to worry about IR35 as you maintain full UK employee status for all of your assignments, giving you complete peace of mind, all of the time. Full PAYE and NI is deducted at source, leaving you able to concentrate on what matters.

Work smart with SmartPay.

MSC

SmartPay – Managed Service Companies

MSC legislation and its effect on Limited Companies.

In the 2007 Budget the Government introduced legislation relating to Managed Service Companies (MSC’s); the latest round of legislation designed to restrict workers gaining financial benefits of receiving payment via dividends from a company rather than as employment income by deduction of full PAYE, without having to actually manage and run a company.

The legislation targets both MSCs and providers of MSCs. It is now against the law to receive payments from a MSC that are greater than the amount that would be received if the worker was a direct employee of the client business receiving the services of the worker.

The Government also introduced transfer of debt provisions to sit alongside the MSC legislation, whereby the PAYE and National Insurance debts of MSCs that have not deducted the appropriate taxes from workers, which are irrecoverable from MSCs, can be transferred to third parties, including MSC providers and other parties that have actively encouraged and facilitated the use of MSCs.

As this legislation has been written so broadly, a worker who is providing services through a personal service company and receiving payments via company dividends but not fully in control of that company, with the company management being provided by another company or person, could be caught by this legislation and be subject to unpaid taxes.

Limited Companies

A limited company is a legal structure and as such has to comply with numerous elements of legislation, not least the Companies Act and Tax and National insurance Acts. The legal obligations of both the company and its directors are complex and failing to fulfill those obligations can result in significant penalties from both Companies House and HMRC.

Compliant solution

SmartPay is an independent company. We only undertake contracts to provide the services that our clients require. We provide our SmartPay employees, to provide the appropriate services to our clients, giving our clients complete peace of mind. We don’t provide limited companies, or any accountancy or company management services.

As an employee of SmartPay you do not have to worry about any of the risks and responsibilities surrounding being a director of a limited company, you do your work and we do all the rest whist enabling you to maximise your income potential with no nasty surprises.

Work smart, work with SmartPay