The Low Income Tax Reform Group (LITRG) is concerned that low paid workers will continue to get caught up in temporary worker 'schemes' despite the government's amendments to proposals tackling businesses who unfairly avoid paying employers National Insurance contributions (NICs) on behalf of their UK-based workers.

The government consulted on proposals to create a specific NIC charge on offshore intermediaries employing workers in the UK, which if the employer failed to pay, would move to the onshore intermediary business closest to the end user of the labour (Intermediary 1), potentially ending up with the onshore end user of the labour.

In response to concerns raised by respondents, including the LITRG, about the uncertainty facing Intermediary 1 and the end user about the potential movement of tax and NIC liability under the original proposal, the government has issued a revised proposal. Under the new plans, the liability will not move and Intermediary 1 will, from the outset, be made wholly and immediately responsible for accounting for the tax and NICs' obligations of all workers who are ultimately engaged by an offshore business.

The LITRG welcomes this move which provides clarity and certainty for employees as to who any earnings-related payments, such as Statutory Sick Pay (SSP) or Statutory Maternity Pay (SMP), should be drawn from for the duration of their employment.

However, while this 'fix' is welcome, the LITRG warns that there are wider issues in the temporary or agency worker industry that still need to be addressed, resulting mainly from the UK's overly complex tax laws.

The consultation document is available HERE