Global Employment Structure Arrangements

You may be aware of the news coverage over the weekend regarding comments from Danny Alexander referring to the use of offshore payroll structures (http://www.bbc.co.uk/news/uk-21812596).

We believe he may be referring to an item that was highlighted in November 2012 regarding supply teachers who were found to be working on the UK mainland but through some form of umbrella company arrangement involving an agency based in the Channel Islands. Please see the below article from November 2012.

http://www.bbc.co.uk/news/uk-20157878

Mr Alexander does, however, make a reference to oil & gas workers but the typical form of offshore employment arrangement that has been prevalent in the shipping and oil & gas industries for many years is quite different from the above and normally does not involve anyone working within UK territorial limits.

We need to see how any new legislation will be targeted but the employment structures using global employment companies by oil & gas and shipping sectors are well-founded based on existing legislation and have been accepted by HMRC if supported by sufficient form and substance to the employing company that has no presence in the UK or any other European Economic Area country. Structures used by onshore teachers such as the Sark based company International Subcontracting Solutions Ltd case above would appear to be very open to challenge based on anti-avoidance rules specific to agency arrangements. Such rules would normally have no application to offshore individuals or mariners directly employed by a global employment company.

There will be lots of activity from industry and professional bodies to find out more but we may have to wait to see Budget press releases and the draft legislation to be sure of where HMRC are going with this. We will keep you updated as we find out more.

For more information on this subject, please contact Gordon Robertson on 01224 625111 or email gordon.robertson@aab.co.uk