Writing for Tax Journal’s Tax Agenda for August 2013, BKL tax partner David Whiscombe comments on consultation on NIC for self-employed entertainers which closes this month.
The consultation on the NIC treatment of self-employed entertainers (available via www.lexisurl.com/R2X81) closes on 6 August. The recent Court of Appeal decision in ITV Services Ltd v HMRC [2013] EWCA Civ 867 (see page 6) highlighted the muddle which the law has got into in this area, one judge commenting on ‘this most unhappily drafted legislation’. It is telling that the consultation document takes 46 pages to explain that the preferred solution is simply to abolish the special rules altogether from 6 April next year. (See also ‘Comment: HMRC’s consultation on NIC for self-employed entertainers’ (Andrew Gotch), Tax Journal, dated 7 June 2013.)
There are two other consultations relevant for those advising SMEs, and these have already been mentioned by Dan Pipe (above). The first of these is the consultation on five of the recommendations made by the OTS in its review of unapproved share schemes. The most significant of the areas for review is probably the proposed extension of the period within which an employee must ‘make good’ amounts paid by an employer in respect of tax on employment-related securities from 90 days to 6 July following the end of the tax year. The inflexibility of the existing period (or at least HMRC’s inflexible enforcement of it) was heavily criticised by Sir Stephen Oliver earlier this year in Benedict Manning v HMRC [2013] UKFTT 252 (TC), describing the provision as ‘penal’. It is to be regretted that HMRC rejected outright the main OTS recommendation in this area, namely that ITEPA 2003 s 222 should not apply at all in relation to employment-related securities (ERS), and that amounts not made good by the employee should be treated as an employment-related loan where appropriate.
The other consultation also mentioned above which affects SMEs concerns the controversial changes to aspects of partnership taxation, which closes with indecent haste on 9 August. This covers a range of proposals from removing the presumption of self- 8 2 August 2013 ~ www.taxjournal.com employment from members of LLPs through countering aggressive partnership structures to outlawing relatively benign arrangements whereby professional partnerships have funded working capital by introducing corporate ‘money box’ members to the LLP. If the changes go through as currently proposed, many firms may need to rethink their structures from April next year.
