Demibourne update

The Special Commissioners' judgment in Demibourne v HMRC SpC486 held that where a worker was recategorised as an employee, the income tax paid by the worker was not offsettable against the PAYE due by the employer on the recategorised wages. The issue was not present for national insurance contributions as HM Revenue & Customs already have the statutory credit to offset wrongly paid Class 2 and Class 4 NIC against Class 1 NIC.

It has been announced that this anomalous consequence of the PAYE regulations will be corrected with effect from 6 April 2008.