Press release: Changes to off-payroll rules welcome but concerns remain

The ATT welcomes proposed changes to the off-payroll rules ahead of their extension to the private sector from April 2020 but insists further work must be done to ensure that businesses are ready.

Draft legislation published yesterday¹ sets out how the rules which have applied to the off-payroll engagement of workers in the public sector since April 2017 should be introduced into the private sector from April 2020.

Michael Steed, Co-chair of the ATT’s Technical Steering Group, said:

“We welcome some of the pragmatic changes which HMRC have introduced following consultation. In particular, requiring the end-user client (the engager to whom a worker provides services) to pass the reasons for the status determination, as well as the determination itself, to both the party it contracts with and the worker. This should provide more transparency and help to reduce the risk of incorrect or blanket status decisions being taken.”

The ATT has previously expressed concerns about proposals as to from whom and how HMRC could seek to recover unpaid tax and NICs where the off-payroll rules are not applied correctly.² HMRC’s proposal is that liability would initially be transferred to the first agency in the chain, and then back to the engager if required.

Michael Steed said:

“We are pleased to see HMRC indicate that these proposals are not intended to transfer liabilities in cases of genuine business failure, where deliberate tax avoidance has not occurred. But the final legislation and accompanying guidance will be key in ensuring that this is indeed the case in practice.”

Michael Steed continued:

“While we welcome these changes, made following previous consultation, and HMRC’s ongoing commitment to work with stakeholders, we would stress that there remains much work to be done to ensure that private sector engagers, agencies and those working through personal service companies are both aware of the changes and ready for them by April 2020.

“Key to the success of these reforms will be the promised improvement to HMRC’s Check Employment Status for Tax (CEST) service, as well as the level of practical HMRC support available to affected businesses both in the run up to, and after, April 2020.”