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HMRC internal manual

PAYE Manual

Employer records: modified PAYE schemes: employees seconded abroad - EP Appendix 7B arrangements from April 2006 (Action Guide)

Note: For arrangements made before 5 April 2006 see PAYE28012.

To deal with a request from an employer to operate modified NICs under EP Appendix 7B follow steps 1 - 9 below. The Guide is presented as follows

Step 1

When an employer advises you that they wish to operate modified NICs on their employees seconded abroad

Step 2

When you receive an application from an employer to operate modified NIC payments in accordance with EP Appendix 7B

Steps 3 - 4

Review of EP Appendix 7B application

Steps 5 - 6

Where an application to operate modified NICs under EP Appendix 7B is accepted

Steps 7 - 8

Annual review of the employer-related electronic file

For details of how to access any of the Employer Business Service functions, use [Index of Functions] button on the left of the screen.

When an employer advises you that they wish to operate modified NICs on their employees seconded abroad

  1. Advise the employer that they have to make an application in accordance with EP Appendix 7B

 

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When you receive an application from an employer to operate modified NIC payments in accordance with EP Appendix 7B

  1. Check whether the PAYE scheme for the employer’s seconded employees is a separate ‘dedicated’ PAYE scheme for inbound and outbound expatriates
  • If yes, forward the EP Appendix 7B application to Personal Tax International in Manchester
  • If no, forward the EP Appendix 7B application to Complex Caseworker, Employer Technical Team to review

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Review of EP Appendix 7B application

  1. Does the application meet all four of the following conditions for the relevant employees?
  • Seconded abroad
  • Non-resident and not liable for UK tax
  • Pay UK NICs on earnings in excess of the annual Upper Earnings Limit, and
  • Receive part of their earnings from a payroll abroad
  1. Ensure that all the above conditions are met
  • If all conditions are met accept the application - go to step 5, or
  • If all conditions are not met, refuse the application and return it to the employer

 

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Where an application to operate modified NICs under EP Appendix 7B is accepted

  1. Sign a copy of the application to return to employer and make an EBS note on the employer scheme confirming EP Appendix 7B agreed

  2. Insert an item in the employer-related electronic file ‘Employer with employees seconded abroad - earnings paid by overseas companies’

 

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Annual review of the employer-related electronic file

The employer-related electronic file ‘Employer with employees seconded abroad - earnings paid by overseas companies’ must be reviewed in April each year

For each entry where there was an EP Appendix 7B arrangement to defer NIC payments for CY-1 you must

  1. Check whether a NICs Settlement Return (NSR) has been received for CY-1
  • If an NSR has been received and the date it was recorded as received is 31/03/CY or earlier go to step 8
    Or
     
  • If an NSR was received after 31/03/CY  consider raising penalties  
  1. Establish if the NIC liability has been paid and that all payments were made by 31/03/CY
  • If payment was received by 31/03/CY or earlier, no further action is required

 

  • If payment has not been received or was received after 31/03/CY contact the Debt Management Office and advise them that interest is due on all payments made after the previous 19 April