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.