Draft Finance Bill 2016 Clause 11 Employee share schemes: simplification of the rules - CIOT comments

6 Jul 2017

In its response, the CIOT has raised a concern that the legislation in relation to workers engaged through PSCs may not work as intended. The government‚ s stated intention is that the restriction on home to work travel and subsistence will only apply to PSCs where there is a ‚ deemed employment relationship‚ under the IR35 rules. However, we think that it is not clear in the legislation that if there is an IR35-type arrangement but no deemed employment contract exists after applying the IR35 test, that the supervision, direction or control (SDC) test does not then need to be considered.

We have also asked HMRC to confirm that existing provisions, which provide for the PAYE liability in respect of general earnings to be transferred to the UK client or agency when there is an overseas intermediary or payer, will also transfer the obligation to account for PAYE in respect of the paid/reimbursed travel and subsistence expenses that no longer meet the test for a corresponding income tax and NICs deduction as a result of applying this new legislation to agency workers.

The legislation is expected to be included in the Finance Bill 2016 in March 2016 and will take effect from 6 April 2016.

Technical Team