Fast Track Visa Rules – Government say non-EU workers can replace Contractors

Fast Track Visa Rules
Fast Track Visa Rules

Fast Track Visa Rules

So what are the Fast Track Visa Rules?

We thought that this was worth publishing again. It shows the attitude of civil servants and Governments of both hues to contractors.

A reader sent a letter to Gordon Brown about his own plight and that of others in our industry. Here is the reply he got:-

Personal Taxation of IT Contractors

Dear Mr. X

Thanks for your memo to the Chancellor of the Exchequer about the personal taxation of IT professionals. I have been asked to reply.

Taking each of your suggestions in turn, the first was that existing Fast Track Visas should be reduced from 5 years to 1 year. In operating the Work Permit arrangement, Work Permits (UK) aim to ensure that the right balance is struck between safeguarding the interests of the resident work force and enabling UK employers to recruit or transfer skilled people from abroad in order to enable them to compete effectively in an international market.

To ensure that the interests of the resident labour force are protected, employers are normally required to demonstrate that they have sought to recruit from the resident labour market.

Acute Skills Shortage in IT

However, as you are aware, Work Permits (UK) do relax that requirement in occupations where it is considered that there is an acute skills shortage (and it is this arrangement and other tier-1 categories which I believe you have in mind when you refer to ‘Fast Track Visas’). Work Permits (UK) work closely with representatives of industry, through sector panels, to ensure that its assessment of such skills shortages reflects current market conditions.

The panels, including one for the Information Technology, Communications and Electronics (ITCE) sector meet on a quarterly basis to review changes in the labour market and make recommendations on the occupations that should form the shortage list. Members of the IT sector panel include government departments, trade unions, relevant industry bodies, and the relevant representative organisations including the Professional Contractors Group (PCG).

Shortage Occpuption List

The panel met on 21 August 2002 and decided, in the light of available evidence about current labour market conditions, to remove all IT occupations from the shortage occupation list. Consequently, for the present, applications for work permits in respect of IT posts will normally be subjected to the advertising requirements of the work permit arrangements, unless the application fulfills the criteria of another tier-1 category such as Intra Company Transfers.

Work Permits (UK) is also concerned to ensure that the work permit arrangements are not used to undercut or depress the ‘going rate’ for resident workers. It is a requirement of the work permit arrangements that the terms and conditions offered to an overseas worker, including pay, must be no less favourable than those offered to a resident worker doing the same job. When an employer makes a work permit application they are required to sign a declaration which states that resident workers will not be displaced as a result of the company employing a non-resident worker.

Employees Working on PAYE Basis

The work permit arrangements however, operate only in respect of those vacancies which are to be filled by an employee working on a PAYE basis. They, therefore, act to ensure that resident workers willing to work on such a basis are not disadvantaged. However, they do not act, nor are intended to, to ensure that those resident workers seeking to provide similar services but on entirely different contractual terms are protected. It is a commercial decision by the employer whether they offer employment terms on a self-employment, contractual, or direct PAYE basis.

On the other hand, it would clearly be an abuse of these arrangements if a UK-based employer obtained a work permit ostensibly to facilitate the admission of an overseas worker to fill a specific vacancy but in practice solely to provide the employee with access to the market in short term contractual work. Work Permits (UK) have put in place administrative arrangements to ensure that cases which may involve ‘body shopping‘ are rigorously scrutinised.

Issue of Work Permits

Work permits are issued for however long there is a need to employ a person up to a maximum of five years. Work Permits (UK) cannot change the length of permission to work in the UK on a work permit that has already been issued!

However, work permit holders are already required to pay tax and National Insurance and cannot act as a contractor unless they change the immigration basis upon which they are in the UK.

If you want more information about Work Permits, you can contact Darren Carter at Work Permits (UK), Home Office c/o Moorfoot, Sheffield S1 4PQ. You can also email Darren at [email protected] or you can telephone him on 0114 209 6085.

Tax Treatment of non-EU IT Contractors

Turning to your suggestion about the tax treatment of professionals who come from non-EU countries under the FTV scheme, we are aware that some are taking advantage of arrangements whereby most of their earnings can be channelled through offshore companies and agencies. I can assure you that where the professional‘s engagement would otherwise be one of employment, these practices are being tackled through the Inland Revenue‘s normal compliance activity.

As far as the intermediaries legislation is concerned, the Government continues to believe that it is right that engagements which, were it not for the intermediary, would be one of employment, should be subject to tax and NICs as if they were normal employees.

Finally, you call for Government IT work to be brought back to the UK. I believe this point has been answered by the DTI and a response was sent to your MP on 30th April.

Yours Sincerely,

A D J Walker

Fast Track Visa Rules for Non-EU Workers.

So, those are the Fast Track Visa Rules for non-EU workers. It seems that non-EU IT workers can replace UK contractors with impunity.

It used to be that if a company couldn’t get a permanent worker they would take a contractor. Now, according to these Fast Track Visa rules, they can take someone form outside the EU instead of a contractor.

Although these rules are from 2002, they still apply.