Julia Irvine 5 Jan 2017 05:38pm

ICAEW says no to HMRC double jeopardy penalty for employers

The ICAEW Tax Faculty has told HMRC in no uncertain terms that its proposal to prevent employers who have been penalised by the Home Office for employing illegal workers, from claiming employment allowance (EA) is unworkable and should be dropped

In its response (REP 01/17) to last November’s consultation document, Employment Allowance: Technical Consultation on Excluding Employers of Illegal Workers, the faculty says that adding yet another complex rule to the already complicated EA rules would be unacceptable.

It would also not only create double jeopardy since HMRC would be following up one penalty (from the Home Office) with another for the same offence, but it suggests that the Home Office penalty is not considered large enough.

In any case the proposed regime would be difficult to police, the faculty continues. “We doubt that those who do not follow Home Office procedures for checking whether workers have the right to work in the UK will disclaim EA, so HMRC will be obliged to check whether all employers penalised by the Home Office have not claimed EA, which will be resource intensive at a time when HMRC is supposed to be shedding staff and cutting its costs.

“Also, we have several reports of HMRC giving EA to employers who are not eligible and have therefore not claimed it, either because they are connected or are public sector bodies. This suggests that HMRC does not know which employers are associated with one another and similarly may well be unable to link PAYE schemes to those who have been penalised by the Home Office for taking on employed illegal workers.”