New rules for companies that provide services to public bodies. From 6 April 2017 under new proposed rules, companies that provides services to public bodies may find that their sales invoices will be subject to PAYE/NI by the public body

For example, under the proposed new rules, if ABC Limited raises a sales invoice for £2,000 for services rendered to a Government Body then the Government Body will treat the £2,000 as salary, deduct PAYE/NI and then pay the net back to ABC Limited

The term “public sector” is likely to include for example:

• Government departments
• Other public bodies, such as the BBC
• Local government
• NHS
• Schools and colleges
• Police

You can find a full list here

HMRC will develop a new digital tool which will help make the decision as to whether or not the new rules apply to you.

The government plans to consult on these changes in the year, before potentially bringing them in on 6 April 2017

It is always important before you take any action that you obtain professional advice. If you have any questions in respect of the above, then please do not hesitate to contact our tax experts by sending an email to kevin@kwaccounting.com