HMRC Targets Dual Contracts of Employment
Since the Chancellor’s negative comments in the last UK Budget and the subsequent introduction of new, anti-tax avoidance rules, so-called Dual Contracts are being increasingly targeted by HMRC.
Approximately 350 individuals are known by HMRC to have Dual Contract arrangements. HMRC has started tax enquiries into most of these people or will do so shortly.
It is likely many more individuals have Dual Contracts of employment in place but have not reported them to HMRC. The risks associated with historical non disclosure of Dual Contracts arrangements require specific, careful management.
Dual Contracts can be relevant in situations other than straightforward employments, for example, where a combination of UK and Offshore employments and Limited Partnership (LP) or Limited Liability Partnership (LLP) memberships exist.
HMRC are currently testing all known Dual Contracts. A specialist HMRC team is leading their tax enquiries, using predominantly Self Assessment enquiry powers. If the need arises, HMRC will and do resort to an array wider powers at their disposal, for example, using the terms of various international information exchange agreements. The number of tax information exchange agreements in place continues to increase.
In addition to the more obvious Income Tax risk associated with Dual Contracts, they give rise to National Insurance and Payroll taxes risks.
Every element of risk, including penalties and any potential non UK tax and Double Tax Treaty aspects, should be factored into an overall strategy for dealing with any given HMRC Dual Contract enquiry.
We are able to offer specialist, experienced assistance in this area.
If you have a dual employment contract it is important to obtain specialist advice to ensure the best result. Call inTAX for a free consultation on 020 3675 8122, or email or Jacqui.firstname.lastname@example.org