Announcing that you have a cunning plan to avoid Employers NIC is one thing, telling the world it has HMRC approval is another thing altogether but this is the latest idea by TMS for commission-only  individuals. Now it strikes this employment tax expert that if you were coming out making bold statments regarding guaranteeing someones self employed status that you would cover your bases and realise there is more to employment status than just a contract and trying to ensure that both parties stick to it – we all know what clients are like in practice, something happens from a commercial perspective, so the nature of the relationship changes, do they immediately ring to chat through the contract!!!

So if we are looking at a red rag to a bull from HMRC’s perspective, what will make it even worse:

• Converting existing employees to self employed under this scheme – employment status is not a matter of choice, it is based on the FACTS of the relationship
• Stating that they have received approval on a pilot case – HMRC do not and will not give blanket approval for contracts, it is down to the working practices of each individual case and they will look at them be assured of that (see the comment below from an HMRC spokesman)
• Marketing it so openly and blatantly as cutting payroll overheads and increasing the earnings of the individual  – many would suggest that they are walking the tightrope of planned tax avoidance and we all know HMRC’s views on “agents” using these methods

So where does this leave potentially naive clients – right in the firing line – how much would you pay to be well and truly on HMRC’s radar courtesy of all the publicity? Brace yourselves for some really interesting employer tax compliance visits or tax investigations now that HMRC are well and truly “involved”

And finally,

An HMRC spokesperson said: “HMRC does not give approval to specific business models. In some circumstances, we do provide advice on the tax and National Insurance implications of arrangements when asked to do so. In such circumstances, we look at the facts surrounding that particular example, but as circumstances vary, HMRC would not give that model approval.”