Thursday, October 27, 2011

How can The Beater/Shoot Beat the Inland revenue?

HMRC has always taken notice of those who, should be “employed” by their paymasters compared with giving their services on a “self-employed” basis. This is because varying tax procedure is applicable.

If a beater’s pay needs to be “earnings from employment” subsequently it should be at the mercy of PAYE as well as NI. This approach may be tedious pertaining to both the individual plus the shoot and can attract fees and penalties if not carried out correctly. Beaters and the shoot will undoubtedly wish to avoid this.

Fundamental tax requirements

A Business should operate PAYE as well as National insurance with respect of all workers. This contrasts with a self-employed individual that must take into account their very own tax plus National insurance to HMRC under Self Assessment.

PAYE can involve extensive signing up, frequent payments to HMRC, submitting deadlines and fines for wrong or overdue reporting. There will also be both equally employers plus employees’ NI contributions to administer. As a result, where probable, it's not at all surprising that beater (plus the shoot) would rather the beater always be treated as self-employed to avoid the arduous PAYE problem.

HMRC would likely obviously prefer the majority of men and women to be addressed as “employed”. NI contributions will also be higher plus expense claims are more restrictive for the “employed” man or women.

HMRC strategy to beaters

In HMRC’s continued quest to squeeze the taxpayer further - the beater/shoot relationship hasn't been undetected.

The employment status and procedure for remunerating a beater ought to be dependent upon whether the individual is a ‘casual beater’ or otherwise.

A ‘contract’ from a casual beater and the shoot shall be regarded as 1 of service (“employment”) and consequently the usual PAYE requirements should apply. However, HMRC acknowledges that practical issues may occur when employers should operate PAYE for brief arrangements on small sums. Therefore HMRC have decided that beaters may be treatable as everyday casuals and also tax does not need to be deducted provided:

i) The beater is employed for a time period of up to a day along with the employment ends that day with no agreement for additional work

ii) The beater is paid in cash at the conclusion of that working day

To make sure that the employment does indeed terminate in the exact same day, there can be simply no arrangements in place to continue the services beyond that time. But the same beater may be used by the same shoot once again in the future. If there was a binding agreement (implied or formal) with regard to future services then this could be a ‘contract’ and PAYE obligations would come into power.

It is important to note that if HMRC do evaluate a beater as being employed, this doesn't automatically entitle the “employed” beater to the related privileges of employment for example vacation or even sick pay. HMRC determination is only relevant for their collection regarding taxes and National insurance functions.

A further warning towards the above ‘casual’ treatment is that it does not apply to NI. The employer (the shoot) will nevertheless consequently have to deduct employee’s NI and pay employer’s NI if the minimum National insurance threshold is surpass (£97/wk).

Additional responsibilities

Also, any operated shoot will still be required to keep records of all paid beaters’ earnings, names as well as addresses. Also beaters ought to keep data of salary received plus paid.

Because of the specialist nature of beaters and many other country side professions, seeking specialist advice is always suggested.

Resources

The writer knows loads about taxation being employed by Price Bailey certified for a Chartered Accountant in 06 and as a Chartered Tax Adviser in 2008. The article writer also has experience with VAT for shoots and has recently been successful in a case in opposition to HMRC relating to registering a local syndicate shoot for VAT purposes.