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Peter Arrowsmith FCA highlights a selection of NIC matters, and provides a timely tip about the payment of Class 1A National Insurance contributions for 2010/11.

COMPS Abolished

The planned abolition of contracted out rebates for money purchase schemes (company schemes) and minimum payments (personal pensions) - both with effect from 6 April 2012 - is at last confirmed by the Pensions Act 2007 (Commencement No. 4) Order 2011 (SI 2011/1267).

IR35 Advice

The centre for contract approval and related queries is now at:

IR35 Customer Service Unit
Ground Floor North
Princess House
Cliftonville Road
NORTHAMPTON
NN1 5AE

The phone number remains 08453 033535 (8.30am to 4.30pm Monday-Friday);
Fax: 08453 023535;
email: IR35@hmrc.gov.uk

Paper P11Ds

With immediate effect, these should be sent to -

HMRC NIC&EO P11D Support Team
Tynemouth House
Room BP8019
Benton Park View
Longbenton
Newcastle Upon Tyne
NE98 1ZZ

Defective Agency Challenge

In the case of Serpol Ltd v HMRC (TC1043), retired police had been supplied to various forces to provide services in obtaining witness statements, other projects working at home, disclosure officers, indexers, exhibit officers and scenes of crime officers.

HMRC claimed that the agency provisions in both tax and NIC law operated so as to make the appellant the deemed employer of the staff provided.

The Tribunal rejected the HMRC assertion in respect of the first two categories as they worked at home and were subject to an exception in the agency provisions. But they found for HMRC on the other categories as there was entitlement to control and direct - even though rarely exercised.

In addition, the NIC appeals were thrown out in their entirety as they neither stated the name of the deemed employer, any 'employee' or group of employees or the period to which the decision related. The Tribunal distinguished this case from Westek v HMRC (SpC 629) - there at least the employer had been named.

Racehorses No Benefit

On the particular facts of the case, the Tribunal held in Chepstow Plant International Ltd & Edward Hayward v HMRC (TC1035) that company-owned racehorses did not generate a taxable and Class 1A-able benefit in kind.

The Tribunal accepted the director's evidence that he did not get personal pleasure from watching the horses in action (along with their various wins) - rather his hobby was steam rallies (involving rather different and more slowly moving beasts!).

Tip of the Month - June 2011

This month's tip is short and sweet and relates to what is a simple matter but which nonetheless often catches out HMRC people, accountants and payrollers alike.

Class 1A National Insurance contributions for 2010/11 are due for payment on or before 19 July 2011. Though the rate has now increased to 13.8%, this forthcoming liability is for last year and is at the old rate of "only" 12.8%. Do not overpay!

Any sized employer can still pay by cheque (unlike Class 1 and PAYE).

However, if you pay electronically then cleared funds must be received on or before 22 July - which means initiating the payment no later than mid-afternoon on Wednesday 20 July (but check that your own bank doesn't need an earlier start than this).

The above is taken from 'NIC Newsletter' (06/06/2011), and is reproduced with the kind permission of Peter Arrowsmith FCA, who retains the copyright.