In line with tax legislation (IR35), any payment for services provided for the University’s departments or its subsidiaries will be paid through the University’s payroll unless the engager can certify, as evidenced from HMRC Check Employment Status for Tax Service (CEST) tool, that they are not liable for Pay As You Earn (PAYE) tax and National Insurance.
The policy applies across the University i.e. to all the University’s departments and also to the University’s subsidiary companies.
The legislation applies to all payments made on or after 6 April 2017, irrespective of whether they are a new contract or an existing contract.
Paying an individual engaged through a PSC via the payroll does not make them an employee and will not impact on headcount. However, if it is established that the work being undertaken would be more appropriately done through an employment contract then the normal routes for setting up, grading and recruiting to a post will need to be followed. Any additional posts will impact the headcount budget, therefore appropriate approvals should also be obtained.
If the assessment of the PSC concludes that the individual should be paid through the payroll, and PAYE tax and National Insurance deducted, then Employer National Insurance will be payable in addition to the new Apprenticeship Levy (from April 2017). VAT will also continue to be charged.
This is a complex area. Contractors working overseas may be affected by the new legislation, see HMRC for reference. In addition, there may be implications on their fiscal position in their host country. Departments should consult the Payroll for advice.
If there is no contract currently in place, then there is no need to assess the individuals. If the individual is engaged in the future, then each engagement will have to be reviewed at the time.
Self-employed individuals who are engaged directly and not through a PSC are not affected by these changes but their employment status should continue to be assessed using the HMRC Check Employment Status for Tax (CEST) tool.
Staff hired through TSS are already paid via the University payroll, so there is no need to declare them.
HMRC can impose a range of penalties on the University, Agency or PSC, depending upon where the error originated.