02/10 Bank Payroll Tax update
Since the Bank Payroll Tax was announced in the Pre Budget Report on 9th December 2009, there has been limited clarification on when the tax will apply and to whom.
In an attempt to provide some guidance on the position, HM Revenue & Customs first produced Frequently Asked Questions on the Bank Payroll Tax regime on 21 December 2009 and these were supplemented by further questions and answers on 24 December 2009. On 15 February 2010, HM Revenue & Customs updated their list of questions and answers to provide clarification on the following additional topics:
- How to determine whether an employee's duties are those which are "wholly or mainly" concerned with relevant regulated activities, or activities that are not relevant regulated activities but consist of money lending;
- How to account for Bank Payroll Tax;
- Whether any penalties will apply for late payments of Bank Payroll Tax;
- The consequences of non-compliance;
- How the Bank Payroll Tax applies to temporary residents, and in particular, clarification on how the 60 day rule applies for non-UK residents;
- Whether a contractual obligation to pay an award arises;
- How to determine whether a company's activities consist "wholly or mainly" of relevant regulated activities;
- Whether equity awards taxed under Part 7 of the Income Tax (Earnings and Pensions) Act 2003 are within the scope of Bank Payroll Tax;
- How an employee changing his function part way through the year so that he becomes, or ceases to be a "relevant banking employee" would be treated;
- When "arrangements" are made during the chargeable period; and
- How the anti-avoidance provisions are intended to operate.
HMRC does not propose to issue further draft legislation before the Finance Bill is introduced, but will publish further details of the definition of "banking group" and how pure brokerage businesses will be excluded from the Bank Payroll Tax regime.
If you have any questions on the Bank Payroll Tax, please do not hesitate to contact Jeremy Glover.