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Temporary carer raises taxing questions for vulnerable beneficiary trust

This month, the Tax Discussion Groups considered the PAYE and NIC implications caused by a vulnerable beneficiary trust taking on a temporary carer.

May 2019

The accountant explained that his client was a trustee of a vulnerable beneficiary, who needs long-term full-time care. The beneficiary is usually looked after by a full-time carer provided by a nursing agency. Recently, the carer supplied by the agency was unavailable for a fortnight and no replacement could be provided by them.

The trustee therefore canvassed for a replacement and was able to secure a temporary full-time replacement to cover the fortnight. The replacement carer requested that they be paid in cash and the total paid to them amounted to over £1,500 for the fortnight.

The accountant queried whether the monies paid to the replacement carer should be paid after deduction of PAYE and NICs, and if this is the case should the trustee register themselves for a payroll?

The discussion concerned whether the temporary full-time carer was an employee or not. This concerned whether there was any mutuality of obligation or a ‘master and servant’ in the relationship between the trustees and the carers. It was felt that the normal arrangements with the agency would be caught by employment taxes. However, the arrangements with the replacement carers may not necessarily be an employee/employer relationship.

Having discussed the situation it was felt that the temporary carer should have been paid under deduction of PAYE and NICs. The carer’s role is such that there is little likelihood of additional reward by the trustees, and the work is being rewarded for the time spent looking after the beneficiary.

However, there is a risk associated with the work undertaken, as the beneficiary is being looked after by the carer. Hence, if they died and the standard of care was found to be at fault then the carer could face litigation.

Although there might be an argument that the temporary carer could be self-employed, in the circumstances it was felt that they should apply PAYE and NICs in future. Therefore, they should apply to have a payroll in place and ensure that they have a contract in place with the temporary carer which is clearly set out.

Each month (with the exception of July and August) the Tax Discussion Groups in Croydon & South East London meet to discuss client tax issues on a no-names basis. These meetings are free to attend and normally cover over a dozen tax issues raised by those attending.

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