HMRC have published a response to their consultation earlier this year on ‘Off-payroll working in the public sector: reform of the intermediaries legislation’.
The original consultation was published in May 2016. In their response HMRC have confirmed that, from 6 April 2017, where a personal service company (PSC) works in the public sector:
- Responsibility for deciding whether the IR35 rules apply will move from the PSC to the public sector body or agency engaging them.
- The public sector body or agency will be responsible for deducting and paying over employment taxes and NICs.
- The 5% allowance currently available to PSCs will not be available.
The consultation response also states that:
- There are no current plans to extend these changes to the private sector.
- The definition of public sector will be that in the Freedom of Information Acts, with guidance to be provided where the position is not clear.
- There will be no new gateway tests: instead a new online tool will be available by April 2017.
- The public sector body will be required to provide information to agencies and workers as to whether they fall within the rules.
- Liability for tax and NICs can be transferred to the individual worker if they provide fraudulent information to a public sector body or agency.
Draft legislation has been published in Schedule 1 of Finance Bill 2017. Comments are invited until 30 January 2017.
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The response and original consultation documents can be found here.