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What is the BPR (Business Payroll Rebate) solution?
The BPR solution is a mechanism used within the insolvency and payroll sectors to unlock value from companies in liquidation that hold tax credits on their Corporation Tax (CT) accounts, typically these may have arisen from successful Research & Development (R&D) claims.
For example, if a company spends £400,000 on R & D, it may receive £100,000 credit on it's CT account (25% of its spend). In standard liquidation, HMRC will only release 14.5% of this credit as a cash repayment to the insolvency practitioner.
However, what BPR and its tax reduction consultants partners do, is step in to purchase the insolvent company, offering a better return, eg 17% to the administrator. This allows BPR to acquire the company along with its CT credit, at a fair value.
How the BPR Solution works
BPR and it's partners acquire the liquidated company and hold it dormant until a suitable client company, like yours, is identified or comes forward.
Rebranding & Labour Supply
If your company is a match, the dormant company is rebranded to reflect your company's identity and continuity for the workforce. The rebranded entity becomes the official employer of your labour force and invoices your company for gross wages, PAYE and National Insurance Contributions.
Tax Credit Utilisation
HMRC ,since 2005 ,permits the offsetting of tax liabilities. BPR and your company request the transfer of the CT tax credit to the PAYE account. For example, if £50,000 is due to HMRC, BPR pays £35,000 in cash and offsets £15,000 from the CT credit, thereby reducing employers national insurance contributions you would normally pay by 30%
Rebate & Cost Savings
The credit is used at a rate equivalent to the employers NIC (typically 15% of payroll)
This 15% saving is split:
* 10% retained by BPR and it's partners (to recoup acquisition costs)
* 5% returned to you, the client company as a rebate, effectively a 30% reduction to your NIC costs
Legal & Compliance Framework
Legitimate Labour Outsourcing : Outsourcing pay roll and employment through a third party entity is a common, legal practice in the U.K. Provided proper TUPE transfer rules are followed and standard employment contracts are in place, HMRC fully recognise this structure as compliant.
Qualification
Your gross payroll per annum is over £1m
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Tax Credit Offsetting
Tax Credit Offsetting
Tax Credit Offsetting
HMRC allows the offsetting of one tax duty against another.
This principle was established in the 1990's after the merger of Inland Revenue and Customs & Excise - which we now know as HMRC.
For instance, if a company is due a VAT refund but has a PAYE liability, HMRC can and do legally offset one against the other. This same principle under pins the BPR Solution
Regulatory Assurance
Tax Credit Offsetting
Tax Credit Offsetting
The practice has been recently confirmed as standard in HMRC's own community forums.
As long as the business relationship is commercial in nature and all taxes are paid in full, HMRC have no objection to the offsetting of tax credits in this way.
Summary of Benefits
Tax Credit Offsetting
Summary of Benefits
* Significant savings on reducing employers national insurance contributions (up to 30%)
* Fully HMRC Compliant and legally established practice
* Employees retain job continuity under a rebranded entity with full rights (TUPE)
* Efficient use of dormant tax credits that would otherwise be lost
* No risk of tax avoidance or evasion as HMRC receives all due payments
* A Standard complimentary online benefits platform for the employees is also provided
* BPR carry out all the administration work, so no heavy lifting on your part
* There is ZERO cost to engage and access the above benefits