There has been a rich seam of interesting or amusing tax cases over the last few months, oxymoronic as that may sound.
The company at the centre of one such case was (still is, in fact) a payroll provider - it processed payrolls for its clients, working out the tax and National Insurance deductions to be made by them and getting cheques from them to settle the tax and NI.
However, it's fair to say that it wasn't a very good payroll provider. In time, it found that submitting its clients' cheques in respect of all those different payroll schemes, all under different tax reference numbers, was just taking too long. So it came up with an imaginative solution - it pretended that all the employees of its clients were its own employees! That way, they could just send all the cheques in together with one reference. Needless to say, you're not allowed to do that. If tax and NI are payable in respect of a particular employer's staff, then they need to paid under that employer's payroll scheme, not some other company's scheme.
Furthermore, the provider also screwed up somewhere along the line, and found that insufficient deductions had been paid over. Some of their clients had underpaid tax - it must have been a nightmare unravelling the records of the spurious, monster payroll scheme that had been created in order to work out exactly which ones had underpaid.
Its clients, understandably - legally, if not morally - tried to argue that the payroll provider should meet the shortfall. After all, it had been telling the Revenue that the cheques were in respect of its own employees. That being the case, surely the payroll provider should stump up the missing cash?
Well, no. The High Court decided that, regardless of what the payroll provider had been telling the taxman, the tax and NI remained the responsibility of the actual employers. The payroll provider could breathe a sigh of relief. Presumably it has now stopped cutting corners!
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