The Social Security Contributions and Benefits (Northern Ireland) Act 1992 (Modification of Section 4A) Order 2007

Statutory Instruments

2007 No. 2072

social security, northern ireland

The Social Security Contributions and Benefits (Northern Ireland) Act 1992 (Modification of Section 4A) Order 2007

Made

23rd July 2007

Laid before Parliament

23rd July 2007

Coming into force

24th July 2007

The provisions of Part 2 of the Income Tax (Earnings and Pensions) Act 2003(1) are modified by paragraphs 3 and 4 of Schedule 3 to the Finance Act 2007(2).

It appears to the Treasury to be expedient, in consequence of those modifications, to modify the provisions of section 4A of the Social Security Contributions and Benefits (Northern Ireland) Act 1992(3) which precede subsection (9) for the purpose of assimilating the law relating to income tax and the law relating to contributions under Part 1 of that Act.

This Order contains modifications which the Treasury think appropriate in consequence of the first recital above.

Accordingly, the Treasury make the following Order in exercise of the power conferred upon them by section 4A(9) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

The Department for Social Development concurs in the making of this Order.

Citation and commencement

1.  This Order may be cited as the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (Modification of Section 4A) Order 2007 and shall come into force on 24th July 2007.

Modification of section 4A of the Social Security Contributions and Benefits (Northern Ireland) Act 1992

2.—(1) Section 4A of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 is modified as follows.

(2) After subsection (2) insert—

“(2A) Regulations may also make provision for securing that where the services of an individual (“the worker”) are provided (directly or indirectly) by a managed service company (“the MSC”) relevant payments or benefits are, to the specified extent, to be treated for the purposes of the applicable provisions of this Act as earnings paid to the worker in respect of an employed earner’s employment of his.

(2B) In subsection (2A) “managed service company” has the same meaning as it has for the purpose of Chapter 9 of Part 2 of ITEPA 2003.”.

(3) In subsection (3)(4)—

(a) in paragraph (a) after “by the intermediary” insert “or the MSC (as the case requires)”;

(b) in paragraph (b) for “intermediary (whether or not he fulfils” substitute “intermediary or MSC (whether or not fulfilling”;

(c) in paragraph (g) after “the intermediary” insert “or the MSC”.

(4) In subsection (4)(b)—

(a) in sub-paragraph (i) after “intermediary” insert “or the MSC”; and

(b) in sub-paragraph (ii) for “him” substitute “that person”.

(5) In subsection (6) in the definition of “relevant payments or benefits” after “the intermediary” insert “or the MSC,”.

Dave Watts

Frank Roy

Two of the Lords Commissioners of Her Majesty’s Treasury

23rd July 2007

The Department for Social Development concurs.

Sealed with the Official Seal of the Department for Social Development

John O’Neill

A Senior Officer of the Department for Social Development

20th July 2007

EXPLANATORY NOTE

(This note is not part of the Order)

This Order modifies section 4A of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 in consequence of the modifications of the provisions of the Income Tax (Earnings and Pensions) Act 2003 (“ITEPA”) by paragraphs 3 and 4 of Schedule 3 to the Finance Act 2007. Those paragraphs extend the scope of Part 2 of ITEPA to managed service companies. Chapter 9 of that Part contains the substantive provisions on the provision of worker’s services through managed service companies.

The effect of this Order is to secure, so far as appropriate, that workers and their earnings are treated, where their services are provided through a managed service company, as if they were employed by the managed service company.

Article 1 provides for the citation and commencement of the Order.

Article 2 effects the modifications of section 4A.

A full Regulatory Impact Assessment was published by HM Revenue and Customs and is available on their website at www.hmrc.gov.uk/ria/full-ria-man-serv-coys.pdf or from the Ministerial Correspondence Unit, HM Revenue and Customs, Yorke House, Castle Meadow, Nottingham. It is also annexed to the Explanatory Memorandum to the Income Tax (Pay As You Earn) (Amendment No. 2) Regulations 2007 (S.I. 2007/2069) which is available alongside those Regulations on the OPSI website.

(1)

2003 c. 1 (referred to below as “ITEPA 2003”).

(2)

2007 c. 11.

(3)

1992 c. 7. Section 4A was inserted by section 76 of the Welfare Reform and Pensions Act 1999 (c.30), modified by S.I. 2003/1884 and amended by paragraph 292 of Schedule 1 to the Income Tax Act 2007 (c. 3). “The Department” was originally defined in section 170 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 as the Department for Health and Social Services for Northern Ireland. The functions of that Department under that Act were transferred to the Department for Social Development by Article 8(b) of, and Part 2 of Schedule 6 to, the Departments (Transfer and Assignment of Functions) Order (Northern Ireland) 1999 (S.R. 1999 No. 481).

(4)

Paragraph (i) of this subsection was amended by paragraph 292 of Schedule 1 to the Income Tax Act 2007.