HMRC published Off-payroll working rules from April 2020 Summary of Responses in response to its second consultation on the introduction of the new off-payroll working rules for workers working in the private sector.

This confirms:

The scope of the reform and the definition of small business:

  • The new rules will only apply to large or medium sized end clients, the definitions being based on the Companies Act 2006 limits.
  • There will be a modified, simpler test based on accounts turnover for unincorporated end clients such as LLPs.

How to ensure parties in the labour supply chain have the information they need to comply with the reform: 

  • The government confirms it will legislate to ensure information is passed down the supply chain where the off-payroll working rules apply, including in the public sector.
  • Draft legislation will include provisions to require the client to pass the reasons for the determination, as well as the determination itself, to both the party it contracts with and the worker

How HMRC should address non-compliance in the labour supply chain:

  • Clients and first agencies carry out the due diligence to ensure labour supply chains remain compliant
  • Draft legislation will set out conditions under which the liability may be transferred to the top parties in the labour supply chain.
  • Supporting guidance will clarify the steps HMRC expect clients and agencies at the top of the supply chain to demonstrate they have exercised reasonable care.

How to address concerns about clients making blanket determinations and giving workers and fee-payers the power to challenge status determinations made by client organisations.

  • HMRC is looking to enhance its Check Employment Status for Tax (CEST) tool. Enhancements will be tested with stakeholders and users, and then rolled out before the reform of the off-payroll working rules are introduced.

HMRC also published a brief outline of the new rules with draft legislation confirming the proposed changes to ITEPA 2003. Further guidance will be published over summer 2019 and targeted communications will be rolled out in the coming months.

Our guides

Off-payroll working for the private sector: at a glance (freeview)
What is off-payroll working? What are the different rules? What to do with your PSC?

Subscriber guides

External links

HMRC Summary of Responses

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