Compliance Check: China – Social Insurance Obligations

Under PRC law, employers are required to pay social insurance premiums for employees. The social insurance premiums cover basic endowment, medical, employment–related injury, unemployment and maternity insurance. Non-compliance with these requirements can result in administrative penalties, claims by employees and other measures taken by government authorities, and cause significant reputational damage. It was originally contemplated that from January 2019, responsibility for social insurance will be transferred to the tax bureau which is expected to bring more stringent collection and enforcement in this area. Although the plan has not been fully implemented according to the original timetable, employers still need to be increasingly cautious when dealing with social insurance payments and ensure full compliance. Continue reading

Extension of IR35 reforms to the private sector: Government shifts compliance burdens to business

HMRC is consulting on the extension of IR35 reforms to the private sector from April 2020.

As previously announced, the rules introduced in April 2017 in relation to off-payroll workers in the public sector will be rolled out to off-payroll workers of large and medium-sized private sector businesses from next year.

But HMRC’s most recent consultation document proposes significant additional compliance obligations for businesses that engage these services (the clients or “end users”). Continue reading

UK: Budget 2018 confirms IR35 reforms will extend to the private sector

The off-payroll working rules (commonly known as IR35) seek to ensure that individuals who are engaged through personal service companies (PSCs) by service users (End Users), but who perform roles equivalent to employees, are taxed through payroll in the same way as employees.

Historically, the obligations to operate payroll and to pay associated employer NIC costs have lain with PSCs rather than End Users; however, in 2017, reforms to IR35 were introduced that transferred these obligations to public sector End Users. It has now been announced that these reforms will be extended to the private sector. Continue reading

UK: Budget 2018 announces NIC change delay and new minimum wage rates

An important announcement in the Budget for employers to note was the decision to delay by a further year the introduction of employer Class 1A NICs on termination payments over £30,000, until April 2020.

There will also be changes to the availability of employment allowance in respect of NIC liability from April 2020 and to the apprenticeship levy from April 2019.

The new national minimum wage rates applicable from April 2019 have also been confirmed, with the rate for those aged 25 or over set at £8.21 an hour. (The Real Living Wage has also increased, to £9 an hour outside London and £10.55 an hour in London.)

Our tax team’s briefing on the Autumn Budget is available here.  Our blog post on the proposed changes to off-payroll working rules from April 2020 is here.

UK: HMRC and HM Treasury Publish Consultation to Extend Recent IR35 Public Sector Reforms to the Private Sector

On 18 May 2018, HMRC published a consultation document entitled “Off-payroll working in the private sector” with the aim of tackling what it perceives as high levels of non-compliance in the private sector with the existing off-payroll working regime (HMRC predicts the costs of such non-compliance will reach £1.2 billion in 2022/23 if this issue is not dealt with).

Continue reading