Offshore employment companies

Produced by Tolley in association with

Employment Tax

Guidance

In the past, HMRC has investigated a number of attempted avoidance schemes involving offshore employment intermediaries. Those schemes were mainly aimed at avoiding secondary (employer) Class 1 NIC. HMRC considered most, if not all, of the schemes to be flawed, and it continues to challenge them, although enquiries can be complex.

See ‘Workers employed on the UKCS’ below for details of the 2024 First-tier tribunal (FTT) case of Bilfinger Salamis, which illustrates the type of arrangement HMRC may have encountered and challenged, under the pre-April 2014 ‘host employer’ NIC rules.

Against this backdrop, HMRC had conducted a review during 2013 as to how best to change the rules relating to offshore employment intermediaries being used to avoid tax and NIC to make enforcement easier. This focused in particular on the deliberate hiring via an offshore entity (agency) to take advantage of the rule that payment of contributions cannot be enforced where the employer has no place of business in the UK.

As a result of the review and subsequent consultation process, the government

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Paul Tew

Writer and advisor at Paywatch

Paul Tew is a freelance adviser, primarily in the areas of pay, personal taxation and remuneration planning. A frequent contributor to technical journals on pay and benefits issues, having written for the "In Business" section of the Times. Paul continues to supply articles for various recognised professional publications including Pay and Benefits magazine, Taxation magazine and Company's Secretary's Review. Paul also has had several loose leaf and bound books published on a variety of subject matter including PAYE, NIC, Sickness and Maternity Pay. Paul has written and presented training courses as well as headed up payroll and employment help desks and acted as an assessor for recognised Payroll/HR qualifications. Paul previously worked in the healthcare and oil sectors managing Pay and benefit services, so has many years of experience in dealing with PAYE and employment compliance issues across a broad range of industries and organisations.

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