WAT a mess! Reply

The Widening Access Training scheme (WAT) was developed for NHS workers to save tax and national insurance.

In fact in many cases the training was free of all tax and NI, the problem has been in its operation.

We have clients in 2 different NHS trusts, they initially got refunds, then had to repay the refunds, and then got refunds direct from HMRC.

Unite have information on their website..

NHS Payroll departments have been contacting staff who may be eligible to receive a refund of Tax and National Insurance (NI) contributions, paid in error, whilst they were in full-time education.

Her Majesty’s Revenue and Customs (HMRC) have stated that employed staff also in full-time education are exempt from Tax and NI up to an annual allowance on earnings of £15,480, whilst in training, provided they meet the following conditions: 

The claimant must have been:

  • An existing NHS employee when starting a training scheme (this could have been at another NHS organisation). 
  • Looking to widen their knowledge. 
  • In full-time attendance at an educational establishment for at least one academic year, and must have attended the course for at least 20 weeks in that academic year. If the course is longer, the employee must attend for at least 20 weeks on average in an academic year over the period of the course.  

Claims for refunds of tax and NI can be made for the period September 1999 to March 2013.  

HMRC normally only accept refund claims for the previous 6 tax years. However, this restriction has been extended back to September 1999, to coincide with the start of a specific training scheme; the Widening Access Training Scheme

This the advice from HMRC to NHS Payrolls

Responsibility for refunds

Training courses attended before 6 April 2013

HM Revenue and Customs (HMRC) will deal with the refund if your employee attended a qualifying WAT course starting before 6 April 2013.

You should submit claims to HMRC on behalf of your NHS employees, providing full details of all eligible workers.

Trusts/authorities should notify HMRC by submitting a schedule by email to the mailbox. nhswat.mailbox@hmrc.gsi.gov.uk

Workers have been advised to contact you to confirm if you’ve already sent a claim to HMRC on their behalf. You may need to ask them for further information or evidence to support their application for a refund.

Training courses attended after 6 April 2013

If workers attended a qualifying WAT course starting on or after the 6 April 2013 the refund should be dealt with by you through your payroll system.

Training course only

If an employee attended a qualifying WAT course and is entitled to a refund, you should complete a Full Payment Submission (FPS):

  1. Enter the full amount of training income paid to the employee in the field ‘Value of payments not subject to Income Tax or NICs in pay period’.
  2. Enter the tax code for the year.
  3. Don’t complete any of the NICs fields.

Training course and paid work

If the employee did a combination of training and paid work and is entitled to a refund for the training income, you should complete an FPS:

  1. Separate the training income from the earned income.
  2. Subject any additional earnings to Income Tax and NICs in the normal way.
  3. Enter the amount of training income received in the field ‘Value of payments not subject to tax or NICs in pay period’.
  4. Enter the tax code number for the year.

If you’ve already sent your final FPS for the years starting 6 April 2014 onwards, you should complete an Earlier Year Update.

The main HMRC links are

Its easy to see why there is confusion!

Hopefully, all those on the WAT schemes will get the correct refunds

steve@bicknells.net

Why Doctors should use Salary Sacrifice for CPE 2

Young Doctor with display board

Doctors often agree to pay for their own continuing training personally because of a shortage of NHS funds but when they do pay for courses its unlikely they will be able to claim tax relief.

EIM32530 states that it is well established that employees are not entitled to an expenses deduction under Section 336 ITEPA 2003 for the expenses continuing professional education (CPE). The Commissioners and the Courts have traditionally held that the duties of trainee doctors, for the purpose of the expenses rule, are limited to the clinical work that they do for the NHS Trust by whom they are employed. Their training activities are not undertaken “in the performance of” those duties for the purpose of Section 336 . That is so even though the training activities may be compulsory, and failure to complete them may lead to the employee losing his or her professional qualifications, and/or their job.

The Commissioners and the Courts upheld that view in a number of cases, as follows:

Parikh v Sleeman (63TC75) – a hospital doctor was refused relief for the expenses of attending training courses during periods of study leave.

Snowdon v Charnock (SpC282) – a specialist registrar was refused relief for the expenses of undergoing mandatory personal psychotherapy.

Consultant Psychiatrist v CIR (SpC557) – an NHS consultant was refused relief for the expenses of CPE necessary to maintain her professional qualification.

Decadt v CRC (TL3792) – a specialist registrar was refused relief for the expenses of taking professional examinations, even though it was a condition of his employment that he should do so.

In the recent case of Revenue & Customs Commissioners v Dr Piu Banerjee ([2010] EWCA Civ. 843), the Court of Appeal accepted that a deduction for training costs incurred by an employee should be allowed if the employee was employed on a training contract where training was an intrinsic contractual duty of the employment (see also EIM32535 & EIM32546) and where any personal benefit, unlike most CPE courses, would be incidental and not therefore give rise to a dual purpose of the expenditure.

Salary Sacrifice solves this problem.

Salary sacrifice works particularly well for training because except in the most extreme cases, employees cannot claim a tax deduction for training costs that they pay personally but if the employer pays for training that is work-related:

  • the employer gets the tax deduction
  • the employee is not taxed on the cost and
  • there is no National Insurance to pay.

EIM01210 confirms this.

steve@bicknells.net

Doctor, Doctor, I think you should be an Employee 1

Young Doctor with stop sign

A report in the Telegraph on the 14th July 2014…

Dozens of NHS executives face possible investigation by HM Revenue and Customs after they refused to answer questions about their tax arrangements, it can be revealed.

An investigation has identified 86 senior health service officials paid off-payroll who have refused to give assurances to their employers that they are paying the correct level of income tax and national insurance.

They are paid through service companies – arrangements that allow public sector employees to be paid as contractors through private companies, potentially cutting their tax bills.

http://www.telegraph.co.uk/health/healthnews/10966314/Dozens-of-NHS-executives-face-tax-inquiry-into-off-payroll-earnings.html

Monitor found 30 foundation trusts had issues to resolve in their report of the 10th July 2014:

  • 20 foundation trusts have 1 or more senior employees paid through an off-payroll arrangement, and they are waiting for responses after asking those employees for assurance about their tax arrangements
  • 23 foundation trusts (including some of the 20 above) still have at least 1 board member or senior member of staff with significant financial responsibility employed through an off-payroll arrangement
  • of these 23 trusts, 9 are facing wider issues relating to their performance which they have explained is affecting their ability to recruit and retain permanent skilled staff; this resulted in the need to use interim off-payroll contracts to attract high-performing staff to help improve the foundation trust’s situation
  • as a result of their performance issues, these 9 trusts are facing current enforcement action by Monitor, which is unrelated to their use of off-payroll employment
  • out of those 23 trusts, the other 14 which are not facing enforcement action have plans to end off-payroll arrangements by the end of the year

Will this end the use of PSC’s in the NHS?

steve@bicknells.net