Employers using temporary staff from an agency are in for an increase in costs, one suspects, as a result of the Department for Work and Pensions’ (DWP) decision to change the fixed term workers regulations.

This decision follows a defeat for HM Revenue & Customs earlier this year in a case against the Thorn Baker agency.

HMRC police the payment of Statutory Sick Pay (SSP) on behalf of DWP and the Thorn Baker case centred on whether there was a exclusion in the fixed term regulations that allowed agency workers on contracts of less than three months to be excluded from payment of SSP. HMRC lost the case and the subsequent appeal, but DWP announced in mid-October that it has decided to amend the regulations to ensure that SSP is due going forward.

One assumes that this change will come into effect from 6 April 2008 and that the increased costs the agencies will incur will be passed on to the client.       

We also now know that the next increase in Statutory Maternity Pay to 52 weeks and the introduction of Additional Paternity Leave and Pay will not happen until at least 2010. So that is at least some good news for employers, many of whom will have to fund 8% of the increased entitlements.

Feedback from the latest consultation on additional paternity leave and pay has also just been published at http://www.berr.gov.uk/files/file41515.pdf.

One of the ‘carrots’ of the Construction Industry Scheme (CIS) is the ability for contractors and sub-contractors to hold gross payment certificates. 

These allow them to be paid gross for their labour costs on invoices presented for payment, rather than being subject to a tax deduction.

The cashflow advantage of having gross payment status is obvious and therefore the ‘stick’ that HM Revenue & Customs (HMRC) wields is the requirement to have a good compliance record in order to be allowed to retain gross payment.

From the middle of October HMRC has introduced what they are now calling the Scheduled Review of subcontractors with this status. Those who have been closely involved in the development of the new CIS regime may know this by its former name of the Ongoing Tax Treatment Qualification Test (TTQT).

The Scheduled Review will run an automated check on the compliance history of subcontractors with gross payment status. The random, and unannounced, check will be run on a rolling basis with 2% of subcontractors checked each week of the year so that all are checked annually – it is unlikely that a check will be carried out more than once a year. 

The check will focus on:

 - the timely submission of all tax returns;
 - the timely response to any tax enquiries; and
 - on time payment of tax and NICs due as an employer and tax deductions on behalf of any subcontractors.

In recognition of teething problems with the new system a soft landing is being applied in ignoring late filing of CIS returns from April – June 2007, in other words up to and including the return due on 5 July. Equally some minor transgressions are permitted before HMRC consider removing gross payment status.

Where gross status is to be removed subcontractors are given 90 days grace during which time they can appeal.

HMRC are also introducing automated penalties for contractors who fail to submit a monthly return (or notify that a Nil return is due).      

More information is available at http://www.hmrc.gov.uk/new-cis/scheduled-review.htm.

From April 2008 a new type of environmentally friendly fuel is being added to those that qualify for a reduction in the company car benefit charge.

Company cars manufactured to use E85 – a mixture of 85% bioethanol and unleaded petrol – will qualify for a 2% reduction from the prescribed percentage relating to the CO2  emissions of the car.

The deductions for alternative fuels from April 2008 will therefore be as follows: