HMRC has now issued the long-awaited consultation into off-payroll reforms for the private sector, due to be effective from April 2020. At a glance there are some interesting points being consulted on:
- Improvements in communicating the IR35 determination, and considers how to ensure it is communicated and shared with the worker. (This does not always happen currently)
- Liability for unpaid tax and NICs moves down the supply chain as each entity communicates the IR35 determination to the next entity.
- Fee-payer responsibility will rest with the last UK-based entity in the supply chain. This is obviously aiming to close a potential offshore loophole, and should encourage better supply chain compliance.
- Should the whole supply chain fail the consultation appears to suggest that liability for unpaid tax and NICs could rest with the end-client. Clearly they will want to ensure that they only work with compliant businesses that are unlikely to go into liquidation.
- There is a new requirement for end-clients to take “reasonable care” in determining IR35 status. This aims to address so-called blanket assessments where clients might take a wholesale approach in determining their contractor population inside IR35, without properly considering all factors.
- Part of “reasonable care” requires the end-client to consider alternative views regarding their IR35 determination, e.g. if the worker disagrees and submits evidence for their view clients will need to show that they have properly considered this. In essence, HMRC is outsourcing the provision of an appeals process to clients.
- Review of HMRC’s CEST tool with regard to improving it for future; we already have a meeting for FCSA members scheduled with them next month.
- The 5% expenses will be going, in line with the public sector reforms. Whilst no surprise, it is disappointing because now more than ever people will need professional advice and therefore expenses.
It is likely that any changes brought in for the private sector will also be applied to the public sector.
You can read the full consultation here
The deadline to submit responses to the consultation is Tuesday 28 May 2019.
As ever, we will be seeking input from FCSA members and stakeholders to shape our position on all of the issues, and we will be organising opportunities for views to be shared accordingly.