The Income Tax (Incentive Payments for Voluntary Electronic Communication of PAYE Returns) (Amendment) Regulations 2005

Amendment of the Income Tax (Incentive Payments for Voluntary Electronic Communication of PAYE Returns) Regulations 2003

6.—(1) Amend regulation 4 (incentive payment — return under regulation 43 of the PAYE Regulations (1)) as follows.

(2) In the heading for “regulation 43” substitute “regulation 73”.

(3) In paragraph (1)—

(a) in sub-paragraph (a) for “regulation 43” substitute “regulation 73”

(b) for “the following qualification” substitute “paragraphs (2) and (2A)”.

(4) In paragraph (2) for “regulation 102(2)” substitute “regulation 141”.

(5) After paragraph (2) insert—

“(2A) An incentive payment shall not be made where a small employer—

(a) has been established,

(b) employs employees, or

(c) makes payments of PAYE income (within the meaning of section 683 of ITEPA 2003),

wholly or mainly for an impermissible purpose.

(2B) For the purpose of paragraph (2A)—

(a) a small employer is “established” where—

(i) persons enter into partnership, within the meaning of section 4 of the Partnership Act 1894(2), in accordance with the principles set out in section 2 of that Act,

(ii) a limited partnership is registered in accordance with the Limited Partnerships Act 1907(3),

(iii) a limited liability partnership is incorporated in accordance with section 2 of the Limited Liability Partnerships Act 2000(4) or section 2 of the Limited Liability Partnerships Act (Northern Ireland) 2002(5),

(iv) a company is incorporated under section 1 of the Companies Act 1985(6) or article 12 of the Companies (Northern Ireland) Order 1986(7), or

(v) an unincorporated association, or a body corporate, not falling within the previous paragraphs, is created,

and it is intended at the time of incorporation, formation or creation that it should be a small employer;

(b) a small employer is established for an impermissible purpose if it is established for the purpose of—

(i) obtaining an advantage in relation to income tax, corporation tax or national insurance contributions;

(ii) obtaining an incentive under these Regulations; or

(iii) avoiding an obligation to file a return by means of electronic communications under any enactment relating to income tax, corporation tax or national insurance.

(2C) For the purposes of paragraph (2B)(b)(i) “advantage”—

(a) in relation to income tax and corporation tax, has the meaning given by section 318 of the Finance Act 2004 (interpretation for the purposes of Part 7: tax avoidance schemes); and

(b) in relation to national insurance, has the meaning which would be given by that section were national insurance a tax to which it applied.”.

(6) After paragraph (3) insert—

“(3A) If an officer of the Board considers that, by virtue of paragraph (2A), a person will not be entitled to an incentive payment for a year of assessment, he may give notice to that effect to that person.”.

(7) In paragraph (4)(b) for “(2)” substitute “(2) or (2A)”.

(1)

The reference is to the former regulation 43 of the Income Tax (Employments) Regulations 1993 (S.I. 1993/744). This provision was re-enacted as regulation 73 of the Income Tax (Pay as You Earn) Regulations 2003 (S.I. 2003/2682).

(2)

1894 c. 39.

(3)

1907 c. 24.

(4)

2000 c. 12.

(5)

2002 c. 12 (N.I.).

(6)

1985 c. 6.

(7)

S.I 1986/1032 (N.I. 6).