Tax changes ahead - Be prepared
06 February 2017
The finances of the NHS have never been under greater scrutiny. In particular, hospitals are experiencing serious cash flow issues and many are facing huge deficits. Pressures of an increased elderly population living longer and with more chronic disease is, of course, a big factor but a significant amount of the overspend is being driven by the expense of using agency staff.
The Government and the NHS leadership have long made clear their disquiet to people using Personal Services Companies (PSCs) within the NHS and other public sector organisations and not paying PAYE and NIC The Treasury has now acted and from April this year changes will come into effect that mean that public bodies have responsibility to account for PAYE and NICs of all people working for them. The new rules mean the public sector is responsible for determining whether the intermediaries legislation applies to those they are contracting with and then collecting the relevant tax and NICs from them.
‘Public sector bodies have a responsibility to taxpayers to ensure that the people working for them are paying the right tax’.
Off-payroll working in the public sector: reforming the intermediaries legislation, HMRC March 2016
All NHS bodies will need to act to make sure they are ready and able to comply on April 6th. Quality of patient care remains the cornerstone of healthcare delivery but, in order to prioritise that, an organisation needs to employ the best and most effective systems thus allowing greater freedom for resources to be allocated to where they are most needed. PwC has developed Tax Clarity to enable public sector organisations to meet the challenge of these impending tax changes and respond efficiently and cost effectively.
Tax Clarity is a powerful online tool that gives visibility throughout the lifetime of a PSC contract, helping public sector bodies manage the compliance with the terms of that contract, including the pay rates to the PSC and the length of the engagement with it as well as providing a real time link to Companies House. It also allows easy collection of NI numbers, verifies VAT registration and automatically calculates the precise amount of PAYE and NICs to be withheld. It will link to existing accounts payable and payroll systems or produces files that can be uploaded into them, depending on your preference. All in all users get real-time detailed management information across both individuals and across all engagements. It is designed to make life easier for the PSC too. They will be able to submit timesheets in real time, track payments and access PAYE and NI information.