FAQ's relating to the engagement of associates and their processing through payroll

Transcription

1 FAQ's relating to the engagement of associates and their processing through payroll 1. How do I set myself up on the College associates' payroll? You will need to complete a payroll starter checklist and return this to the College (associates@college.pnn.police.uk). Here is the document that you need to complete: arter_checklist_v1.0.pdf You will need your national insurance number to complete the form. 2. How do I get paid, as an associate through the College associate payroll? You will need to submit an invoice/claim form stating the Purchase Order number. Your invoice/claim must not exceed the value of the Purchase Order. You must send your invoice to payables@college.pnn.police.uk 3. How do I know when I should expect to be paid? You will be paid in accordance with the terms of your contract / Purchase Order with the College: when an invoice is received on or prior to the 10th day of the month, payment will be made on or around the 20th day of the month; or when an invoice is received after the 10th day of the month, payment will be made on or around the 20th day of the following month. 4. How do I find out what can delay my payment, even though I have done the work and I have submitted my invoice / claim? You must always quote the Purchase Order number and your invoice must not exceed the Purchase Order value. Your engaging manager must have confirmed internally that the work has been completed ( Goods Receipting ). If there is a delay to the Goods Receipting your invoice/claim will not be paid. 5. How do I find out more about IR35? General guidance about the off-payroll rules is published here: The key points are that the rules for off-payroll working in the public sector apply when:

2 a worker personally performs services, or is under an obligation to personally perform services for the client the client is a public authority the services are provided through an intermediary (usually the person s own company but in some cases a partnership or individual) the services are provided under circumstances where, if the contract had been directly with the client, the worker would be regarded for income tax and NIC purposes as an employee of the client or the holder of an office with the client, or the worker actually is an office holder with the client HMRC has published a guidance to help public authorities establish whether a person would be regarded for Income Tax purposes and NICs as an employee of the client. 6. How do I know how I will be treated for IR35 purposes? The College advises engagements for certain work types are within IR35. These are: Training delivery taxable; Assessors at recruitment events taxable; Marking papers / being an examiner taxable; Invigilators taxable. There are a couple of work types that the College will treat as being outside IR35: Executive coaching off site can be paid gross; Personality tests / 360 feedback; Design and development of training products off site can be paid gross; Peer review of research can be paid gross. In addition, certain ad hoc consultancy projects can be paid gross. 7. How do I find out how the College conclude how different casual work types are treated? The College uses the HMRC Employment Status Service, which is an on line questionnaire: 8. Why does the College treat each work type consistently for the purposes of IR35 compliance? The College looks at the type of work that is being delivered (e.g. training delivery, executive coaching) and then applies the HMRC Employment status tool based upon the nature of the role. At least one other large Government department has done the same. This then ensures that all associates are treated on a fair and consistent basis, whilst ensuring that the College is able to demonstrate compliance to HMRC.

3 9. How do I understand the difference between a trainer and a Subject Matter Expert for tax purposes? The College raised a technical query with HMRC in March 2017 and the answer was clear: the number of days undertaken makes no difference to tax treatment. 10. How do I find out how IR35 affects my company that has a number of staff / subcontractors? One of the key questions that determines whether an engagement (i.e. a separate piece of work) within IR35 is the ability to send a substitute. Generally, the College has requested an individual and that who the contract is with. Even if the associate was trading through a limited company it is still the individual person that the College wishes to include at their training event. ================================================================= The HMRC employment status questionnaire asks about Substitution: Would the end client accept the worker's business sending someone else to do this work instead?, because this means someone who: Is equally skilled, qualified, security cleared and able to perform the worker's duties Won't be interviewed by the end client before they start (except for any verification checks) Isn't regularly engaged by the end client Will do all of the worker's tasks for that period of time Will be substituted because the worker is unwilling but not unable to do the work ================================================================= A situation that could be an exception in a training context. This would be if the potential pool of substitutes were agreed (after interview) at the outset (i.e. before the Purchase Order issued) e.g. XYZ Ltd is a specialist in fire safety and has three employees. The College plans to run a course on safety in general, of which one day will be dedicated to fire safety. XYZ Ltd is a busy company, and is committed to deliver the day to the College, but says at the outset that it will be either Jo, Kim or Lou. Jo, Kim and Lou are all known to the College and are on the list of associates. In other words, the potential and agreement to use either of Jo, Kim and Lou is determined at the contract stage. So, if you have a pool of interchangeable employees from your own company, you will need to discuss and negotiate this at the point of engagement. The College will not support any contrived arrangements: what counts will be the actual situation in relation to the service required by the College. 11. How do I complain about the College deducting tax from the work that I have undertaken for the College? Ultimately it is the College s responsibility to ensure IR35 compliance with the new regulations. Please see paragraphs in the attached link

4 However, if you do not agree, you can contact HMRC: Contacting HMRC about IR If you feel that the College is treating you unfairly then there is a complaints process Because there is mutuality of obligation between the College and the associate beyond each separate contract, you do not need to engage with the College if you do not wish to do so. 12. How do I find out how much tax has been deducted? Any tax the College deducts from engagements by associates does not have to be paid twice, and you will receive a record of tax deducted. Either as a payslip and then as a P60 at the end of the tax year. 13. How do I get help with IR35 compliance issues in relation to my work at the College? The College finance team has set up a dedicated address: IR35Compliance@college.pnn.police.uk The College aims to respond to s sent to this address within five working days. 14. How do I find out about taxation of the UK travel costs that the College has agreed to refund me? Generally, the College will tax your travel costs to and from your permanent workplace. Because the College contracts with associates on an event by event basis (rather than, say, zero hours contracts), your permanent workplace will be the training location that you will be required to deliver from, even if that is just for a few days. Travel Expenses are treated as earnings of employment but they are not subject to tax where they are necessarily incurred in the performance of the duties or attributable to the employee s necessary attendance at a place in the performance of duties (e.g. a temporary workplace or a client s offices), except where they are the expenses of ordinary commuting or private travel. Associate trainers are contracted to deliver training at a particular location for a specified period of time. It follows that this location will be regarded as the individual s permanent workplace for the duration of the contract. Travel to and from the workplace (plus any hotel and subsistence costs) fall within the definition of ordinary commuting. PAYE deductions for tax and NICs will be made on expenses paid by the College to personally engaged associates. 15. How do I book my travel costs in the UK? You are responsible for paying for your own travel costs within the UK. You then need to claim for these from the College on your invoice/claim. The College will deduct tax from expenses. 16. How do I know what rates to claim for UK travel? An Associates Travel Policy will be prepared, but in the meantime you should use the rates set in the College Travel & Expenses Policy, which include: Mileage at 40p; Using car hire where more cost effective than using your own vehicle;

5 No first class travel; Limits on hotel rates and meals. 17. How do I find out how expenses are treated for my international work as an associate? For international training work, where the overseas workplace is a permanent workplace, tax relief will not be available under the main travel expenses rules. In this situation the special rules for foreign travel expenses are used instead. Under the special rules, employees who carry out only part of their duties abroad are entitled to tax relief on travel to and from the overseas location. However, they are not entitled to tax relief on accommodation and subsistence expenses incurred while working abroad. Consequently, the per diems paid to international training associates will also be taxable. Flights from the UK to the International work location will not be taxable. 18. How do I find out if my on-site accommodation at Ryton or Harperley Hall during my work as an associate will be treated as a taxable benefit? Historically, the College currently has not treated accommodation on site at Ryton or Harperley Hall as a taxable benefit. This situation has been advised to HMRC, and associates will be notified if there will be any changes going forward. 19. How do I find out the detail of how the College concluded that training delivery (with no substitution) is taxable at source by the College? Please see below the results from HMRC Employment Status Service undertaken on 06/03/17, as a generic test for trainers, that concludes that the IR35 rules do apply: 1. Which of these describes you best? The end client. 2. Has the worker already started this particular engagement for the end client? No. 3. How does the worker provide their services to the end client? As a limited company. 4. Is the worker or their business an office holder for the end client? No [note: this would only apply to Directors / NED s of the College as the end user]. 5. Would the end client accept the worker's business sending someone else to do this work instead? No [note: Generally, it will be the specific named individual to undertake the training. The supplier does not have the right to send a substitute]. 6. Can the end client move the worker to a different task or project than they originally agreed to do? No - that would need to be arranged under a new contract or formal agreement. 7. Once the worker starts the engagement, can the end client decide how the work is done? The worker and other people employed by the end client agree how the work needs to be done [note: acknowledging that the trainer might have a view on some of the content of the training]. 8. Can the end client decide the schedule of working hours? The end client decides the worker's schedule [although there is some home based preparation, most of the training work will be at a specific site at a specific date / time for a preplanned course that will have been determined by the College as client].

6 9. Can the worker choose where they work? Partly - some work has to be done in an agreed location and some can be done wherever the worker chooses. [Though most of the work will be determined by the College as client deciding upon location]. 10. What items does the worker have to buy for this engagement that they can't claim as an expense from the end client or an agency? Not relevant [the College contract para 3.3 requires the supplier to provide all plant and equipment. In practical terms, there is little equipment provided by the worker the College has training venues. The College sometimes provides laptops]. 11. What s the main way the worker is paid for this engagement? An hourly, daily or weekly rate. 12. If the end client isn't satisfied with the worker's output, when would the worker have to put it right? They can't put it right as the work is time-specific or for a single event. [Although the contract that the College has requires the defective work to be put right (see para 3.12), in practical terms for training courses, the event is time specific and has gone. The question refers to the situation, rather than the contract clause]. 13. Is the worker entitled to any of these benefits from the end client? No. 14. Is the worker responsible for any of these duties for the end client? No. 15. Does the worker interact with the end client's customers, clients, audience or users? Yes. 16. When the worker interacts with the end client's customers, clients, audience or users, how do they identify themselves? They work for their own business. [This assumes that the worker refers to themselves as being from XYZ Training Ltd to the delegates rather than saying they were from the College]. 20. How do I find out the detail of how the College concluded that executive coaching is NOT taxable at source by the College? Please see below the results from HMRC Employment Status Service that concludes that the intermediaries legislation does not apply to this engagement [11/04/17]: Your answers: 1. Which of these describes you best? The end client. 2. Has the worker already started this particular engagement for the end client? No. 3. How does the worker provide their services to the end client? As a limited company. 4. Is the worker or their business an office holder for the end client? No. 5. Would the end client accept the worker's business sending someone else to do this work instead? No. 6. Can the end client move the worker to a different task or project than they originally agreed to do? No - that would need to be arranged under a new contract or formal agreement. 7. Once the worker starts the engagement, can the end client decide how the work is done? The worker decides how the work needs to be done without any input from the end client. 8. Can the end client decide the schedule of working hours? The worker decides their own schedule. 9. Can the worker choose where they work? Yes - the worker decides. 21. How do I find out the detail of how the College concluded that external assessment is taxable at source by the College? Please see below the results from HMRC Employment Status Service that concludes that The intermediaries legislation applies to external assessor engagements:

7 1. Which of these describes you best? The end client. 2. Has the worker already started this particular engagement for the end client? No. 3. How does the worker provide their services to the end client? As a limited company. 4. Is the worker or their business an office holder for the end client? No. 5. Would the end client accept the worker's business sending someone else to do this work instead? No. [The College is engaging the individual. Also at assessments the College allocates assessors to teams based on gender/ethnicity mix, and also partner people up according to experience, which further evidences the lack of scope for substitution]. 6. Can the end client move the worker to a different task or project than they originally agreed to do? No - that would need to be arranged under a new contract or formal agreement [the Purchase Order is very specific as to the date / location / task]. 7. Once the worker starts the engagement, can the end client decide how the work is done? The worker and other people employed by the end client agree how the work needs to be done. 8. Can the end client decide the schedule of working hours? The end client decides the worker's schedule [there is a strict timetable for the assessment centre, and the candidates, external assessors and College staff do not have a choice about this on the day]. 9. Can the worker choose where they work? Partly - some work has to be done in an agreed location and some can be done wherever the worker chooses [although there might be off site preparation time, the key requirement is being physically present at the assessment centre]. 10. What does the worker have to provide for this engagement that they can't claim as an expense from the end client or an agency? Not relevant. 11. What s the main way the worker is paid for this engagement? An hourly, daily or weekly rate [Assessment centres are a long day]. 12. If the end client isn't satisfied with the worker's output, when would the worker have to put it right? They can't put it right as the work is time-specific or for a single event. [The expectation is that the work (including rewrites) is done on site within the long day that they are being paid for.] 13. Is the worker entitled to any of these benefits from the end client? No. 14. Is the worker responsible for any of these duties for the end client? No. 15. Does the worker interact with the end client's customers, clients, audience or users? Yes. 16. When the worker interacts with the end client's customers, clients, audience or users, how do they identify themselves? As working for the College (even if they presented as working for their own business, this would not affect the outcome). 22. How do I find out the detail of how the College concluded that training delivery with genuine substitution is NOT taxable at source by the College? Please see below the results from HMRC Employment Status Service that concludes Training role with substitution agreed in advance by the College at time of contracting for two or more completely interchangeable associates, where the College is contracting with one limited company. The intermediaries legislation does not apply to this engagement: 1. Which of these describes you best? The end client. 2. Has the worker already started this particular engagement for the end client? No. 3. How does the worker provide their services to the end client? As a limited company. 4. Is the worker or their business an office holder for the end client? No. 5. Would the end client accept the worker's business sending someone else to do this work instead? Yes. 6. Would the worker's business have to pay the person who did the work instead of them? Yes.

8 23. How do I describe my contractual arrangement with the College? An associate is a worker that has a contract for the supply of services with the College, with terms described in the contract. You are not an employee (although you may well be taxed). Here is a link that explains the difference: