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Employer's NIC - Change in Place of Business Rules
Story added: 05/05/2010

As a general rule, employers that do not have a place of business in the UK are not liable to pay any employer’s NIC (Class 1, Class 1A, Class 1B). In such cases we often operate PAYE on a voluntary basis for the employer, or alternatively a “direct PAYE scheme” in the employee’s name.

With effect from 1 May 2010, an employer with registered offices within the EEC, EEA , EU and Switzerland who assign or employ individuals in the UK will automatically be treated as having a place of business in the UK, even if no such presence previously existed. This means that both employee (primary) and employer (secondary) NIC will be payable. Previously, employer’s that did not have a place of business in the UK were not assessable to penalties for PAYE failures. Under the new rules HMRC will be able to impose the penalties in the same way as employers with an actual UK presence.

The UK social security Regulations have not as yet been amended to this effect. However, we should expect the legislation will be backdated to 1 May 2010 when the legislation comes in force. It is not clear whether all non-resident European employers who already have individuals working in the UK are caught by the new rules or whether the changes only apply to new employers from 1 May 2010. Furthermore, there is no indication that the deemed presence test applies to all employers, and unless the new Regulations state otherwise, individuals employed by treaty countries (e.g. USA) and the rest of the world would follow the old rules.

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