Parents beware: declare now or suffer later
The decision by HM Revenue and Customs (HMRC) to focus its harsh glare on the nanny sector – as revealed in the national media over the weekend – will bring major changes to the way parents handle their tax affairs.
Latest Government figures suggest more than 30,000 nannies are working in England. And it believes that up to a fifth worked without making tax or National Insurance payments. The Financial Times estimates that up to £57m is being lost to the Treasury.
Leading payroll support company Nannytax today warned parents to take note of the looming crack-down, stop paying their nannies in cash or kind, and implement a proper PAYE system.
As a key partner in this field, Nannytax has been invited to join HMRC on a pilot scheme to test how RTI might work. As the leading domestic payroll provider, Nannytax is invited to join the pilot scheme; this is testament to the outstanding reputation Nannytax has in the industry.
While RTI may be successful in swelling the Treasury coffers, Nannytax is anxious that the move could push more parents and nannies over to the dark side.
Nannytax Payroll Services Director Helen Harvey, said: “The idea of encouraging greater compliance with the tax laws of the land is a sound one. However, I am anxious that it could push hundreds of law-abiding middle class families towards illegal activity due to the sheer weight of the paper-work.”
“We will be encouraging HMRC to look carefully at Real Time Information and test it thoroughly before implementing,” Helen said. “The Government would do well to look at the whole childcare system and address why some parents are resorting to tax evasion.”
Nannytax will be using its influence on the pilot scheme to push for Government guidance to be made available to parents seeking to employ a nanny.
Helen said that too many parents were still relying on internet trawls through sites such as Gumtree to find the right person to help raise their children.
“Parents who go online to find their nanny instead of using a reputable nanny agency are more likely to indulge in tax evasion by paying cash in hand,” she said. “Quality agencies offer numerous benefits including reference checking, CRB checks and educating parents on their responsibilities as an employer. This is essential work that should not be cast aside.”
However, in principal, Nannytax sees the pilot project and the desire to close down loop-holes as a sensible move, so long at is carried out with sensitivity and understanding.
Stuart Maclean, Managing Director of Nannytax, said it was vital that the major influencers in the industry continued to encourage employers to conduct their tax affairs in a law-abiding manner.
“Nannytax will continue to actively encourage employers to behave in a tax-abiding manner,” Stuart said. “At the same time, nannies need to take responsibility for themselves and insist that their employers conduct their PAYE appropriately. Employers who do not declare their nannies’ earnings are depriving them of their statutory entitlements,” Stuart added.
One of the ways Nannytax adds extra value is through its dedicated software that allows employers to back-process their payroll. This enables parents to establish what they owe through unpaid taxes going back several years if necessary. Very few companies can do this.