The government looks set to change the way off-payroll workers in the private sector are taxed. You have until 10 August to contribute to a consultation on how that legislation should be introduced.
Off-payroll workers include:
The proposed new legislation is similar to changes implemented in the public sector in recent years.
HMRC believes the existing IR35 legislation "is not working effectively, and non-compliance is widespread". It estimates that only 10% of PSCs that should apply the legislation actually do so.
Although we don’t know when the new legislation will be introduced, the timing of the consultation makes a commencement date of April 2019 possible.
Public authorities are now responsible for determining the status of workers engaged through PSCs or other intermediaries.
They are also now obliged to deduct income tax and employee National Insurance Contributions (NICs), and account for employer NICs in respect of payments to intermediaries, where the worker would have been an employee if engaged directly.
HMRC commissioned independent research into how public sector organisations implemented the new rules and procedures.
Only half of public authorities surveyed said they found the rules easy to comply with.
A considerable proportion found it hard to
Also, contractors were unhappy because switching off-payroll contractors to on-payroll suggests that they should have been accounting for tax under IR35 previously.
Introducing procedures to deal with this legislation will involve many stakeholders across the organisation, such as HR, finance, legal, procurement and payroll.
Between these functions, firms will need to:
Above all else, the message is clear – start to plan now, as it will undoubtedly make things easier when the new rules are determined.
For more information please contact Susan Ball or your usual Crowe contact.