HMRC has laid the The Income Tax (Pay As You Earn) (Amendment) Regulations 2008 before Parliament.
The Regulations close the loophole identified in Demibourne Ltd v HMRC (see bulletin 15/8/06), which held that HMRC was entitled to charge an employer full tax and NI under the PAYE regulations, where the parties have wrongly viewed the employee as self-employed, without giving credit for the tax and national insurance already paid directly by the 'employee'. In other words, under this loophole, HMRC could charge tax twice!
Well, the loophole is closed. The Regulations come into force on 6th April 2008.
The Regulations also tidy up the PAYE Regulations, given the abolition of the starting-rate of income tax.
Monday, 31 March 2008
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