The Real-Time Information (RTI) regulations for reporting payments to individuals were introduced by HMRC with effect from 6 April 2013. The 2013/14 season was therefore the first time that shoots, along with all other employers, were required to consider PAYE reporting under this regime. Broadly, the regulations dictate that the following information must be recorded every time a payment is made to an individual, whether they are employed in the traditional sense or not:
- Date of birth
- NI number (or address if not known)
- Hours worked
Since the new regulations were announced a couple of years ago, there have been a number of changes, due in part to lobbying by a number of interested parties, including shooting organisations, the agricultural industry, and other industries that routinely employ casual workers. HMRC has an existing agreement with the National Farmers Union that covers payments to harvest casuals and one with the Country Land and Business Association for casual beaters. These agreements explain how payments to daily paid harvest casuals and casual beaters should be treated for tax. However, this does not mean that the payments are not subject to tax. A separate but similar agreement exists for National Insurance contributions (NICs) on payments to harvest casuals.
Who do the arrangements apply to?
The arrangements only apply to casual employees who are taken on for either harvest work and shoots and who are not members of the employer’s family.
Employed for one day or less
The individual is classified as a daily harvest casual or beater and:
- Is taken on for one day or less
- Is paid off the end of that period
- Has no contract for further employment
If the above apply tax need not be deducted, but the information noted above, will still need to be reported.
Employed for more than one day, but less than two weeks
If the individual is taken on for longer than one day, but for no more than two weeks and has not worked for you since the previous 5 April and was not paid above the PAYE threshold, then tax need not be deducted. The guidance above for an employee employed for one day or less is in point.
Employed for more than two weeks
Anyone employed for more than two weeks has to be put through the RTI system in the same way as any other employee.
What does all this mean in practice?
There are really only two options. First, you could consider continuing to treat beaters as employees and comply with the RTI reporting requirements. This is likely to be the only realistic option (but see below) and will ensure that shoots comply fully with the legislation. HMRC has recently confirmed that NT tax codes can be used for beaters who fail to be treated as daily harvest casuals, so that there is no requirement to deduct PAYE income tax on their earnings. There will still be a requirement to report the amounts paid to each person, but essentially, this means that shoots will be in the same position as in previous years, but with a more onerous reporting regime. The other option will be to consider whether the beaters can be treated as self-employed individuals, rather than employees. The normal tests for employment and self-employment will need to be considered. HMRC may accept that beaters are self-employed if a number of conditions are met but in the vast majority of situations it is unlikely that these can conditions will be met.
Relaxations and transitional arrangements
Due to intense lobbying, HMRC has made several relaxations in recent months. If the employer has fewer than 50 employees, then the new system is relaxed until 5 April 2014. In these cases, the information can be submitted at the time of the normal/regular payroll run for the month.
A further relaxation is that existing employers with nine or fewer employees who need more time to adapt will be able to report PAYE information on or before the last payday in each tax month until April 2016. However, this is unlikely to be of much benefit to most shoots which will employ greater than nine employees during the course of a season.
The situation is very fluid at the moment, and this information is correct only at the time of writing. We expect further changes in the coming weeks and months and shoots should take up-to-date advice before making payments to beaters and other casual workers.
It is our opinion that RTI is like using a 12-bore, full choke, heavy load cartridge to shoot a snipe. What is really needed is a light load of number nine shot in a fully open barrel! Large employees have the time and resources to comply with the new system, but small employers have enough red tape already. At the end of the day is the overall tax take really likely to increase?
It’s hard enough trying to shoot those high pheasants at the best of times, let alone working out how to pay the beaters for the privilege.
This article was written by mca group, Chartered Accountants and Business Advisors. mca group advises a number of agricultural and shooting estates on their tax and other financial affairs. For practical, no nonsense advice, contact Nicky Charman (email@example.com) or Martin Cox (firstname.lastname@example.org).