Press release: HMRC must keep up off-payroll support

“We welcome today’s announcements of a softer approach from HMRC but this cannot mark the end of HMRC’s support to affected business people.

“We must have ongoing support from HMRC to help businesses get their employment tax status decisions correct, and support affected contractors in understanding their position and their rights.

“HMRC should continue to engage with professional bodies and other stakeholders after the new rules in the private sector begin in April, to ensure problems are identified early on and addressed promptly.”

Today’s report says HMRC will ‘commission external research into the impacts of the reform six months after implementation, including on how status assessments are being made’.

Jeremy Coker said:

“The planned research announced today needs to be wide ranging and involve not just clients (the businesses which require workers’ services) but also agencies and workers.

“The previous research commissioned in 2017 focused on the impact on public sector bodies in their capacity as clients rather than on the impact on supply-chain agents, personal service companies or workers who were also affected by the change.

“We call for more research beyond that at the six-month stage which was announced today. That early research will be an important step in identifying issues as promptly as possible but the full impact of the new rules is unlikely to become clear until after the affected workers have submitted their 2020/21 tax returns. A deeper and wider review in the first half of 2022 would give a better picture as to whether the new rules have achieved their goals.”

Notes for editors

1. Changes to the off-payroll rules which are scheduled to be introduced for the private sector from April 2020.  Similar changes were introduced in the public sector in April 2017, and were criticised widely for being rushed. If the rules are implemented in the private sector as proposed in the draft legislation then, from 6 April 2020, responsibility for determining whether an engagement falls within the off-payroll rules will move from the worker’s personal service company (PSC) to the client (the business which requires the worker’s services). The party which pays the PSC - which may be the client, or an agency depending on the commercial arrangements - will then be required to operate PAYE and NICs as appropriate.