The Inland Revenue was forced to clarify the tax situation after the NFU shined its spotlight on tax offices that were applying PAYE incorrectly.
Many producers, particularly in the horticulture sector, faced substantial tax bills for their casual workers because tax offices were applying normal PAYE tax rules instead of the Daily Harvest Casual Arrangements.
Terry Donaldson, chief taxation adviser at the NFU, said: ‘We wrote to [Inland Revenue] head office saying it was wrong. We took a tough line on the arrangement saying once you had employed somebody for three or four days it did not apply any more.’
Some NFU members faced bills of £300,000 because of the misinterpretation, which in some cases went back several years.
The Daily Harvest Casual Arrangement states that normal PAYE rules do not apply to workers who are employed in harvest operations, taken on for a period of one day, and who finish at the end of that day paid off in cash with no contract for further employment.
Richard Shaw, Rabjohns partner, said: ‘Clarification of the rules for taxing casual workers will save thousands of pounds for farmers and growers.’
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