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August 22, 2019

ICAEW comments on employment allowance and state aid

The Institute of Chartered Accountants in England and Wales (ICAEW) has submitted its comments on the Employment Allowance eligibility reforms draft legislation and related documents.

“The administrative burden for smaller employers of ascertaining the state aid information to report on payroll submissions may be disproportionate to the value of the employment allowance claimable, which seems at variance with a policy intended to benefit such businesses,”said the ICAEW, adding that: “This seems at variance with a policy intended to support smaller businesses. We can only assume that state aid (StA) was not considered before the decision was made to restrict EA to smaller employers.”

The ICAEW believes that the proposal goes against Tenet Four of its Ten Tenets for a Better Tax System, which states ‘Easy to collect and to calculate: a person’s tax liability should be easy to calculate and straightforward and cheap to collect’.

Furthermore, to enable employers to comply, the ICAEW warns that ‘HMRC will need to publish detailed guidance in plain English, preferably all in one place, to explain how employers, and, where applicable, associated entities, should ascertain and calculate all the information that they will need to report in the employer payment summary (EPS). Official guidance currently available, for example State Aid: the Basics and The State Aid Manual, is written for public sector officials and assumes too much knowledge and contains too much jargon to provide meaningful guidance to the average SME employer and payroll agent’.

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