The Association of Taxation Technicians (ATT) is calling for greater clarity about next April’s changes to the off-payroll rules.
From April 2020, the off-payroll rules which already apply to contractors engaged in the public sector will be extended to the private sector. This will shift responsibility for determining whether an engagement falls within the off-payroll rules from the worker’s personal service company (PSC) to the engager (the business which requires the worker’s services). Where the rules do apply, the responsibility for applying the appropriate tax and National Insurance contributions will fall on the engager or agency which pays the worker’s PSC.
In its submission to HMRC,1 the ATT has outlined its concerns about the lack of detail in the relevant draft legislation for Finance Bill 2019-20 published in July.
Michael Steed, Co-chair of ATT’s Technical Steering Group, said:
“Uncertainty in how the off-payroll rules will operate in practice is making it difficult for businesses to make adequate preparations. We encourage HMRC to release more information and detailed guidance as soon as possible.”
The ATT is particularly concerned about the lack of detail as to when an agency or engager can be held liable for unpaid tax and National Insurance because another party in the labour supply chain has failed in their obligations under these rules. For example, there may be three agencies involved and a failure by agency number three to do what it needs to could leave agency number one or even the engager liable for unpaid taxes even though they themselves have complied with all their obligations. The details as to when liability could be transferred in this way are very important to the risk analysis and preparations of businesses affected by the off-payroll rules.
Michael Steed said:
“These changes come in from next April which means that businesses now have only about six months to get ready - and this at a time when many may also be preparing for or responding to the implications of Brexit.
“There remains much work to be done to ensure that private sector engagers and agencies are both aware of the changes and ready for them. The current lack of clarity on some key areas makes it difficult for businesses to prepare properly. More information and detailed guidance from HMRC is urgently needed if the roll out of these new rules will succeed."
Notes for editors
- ATT’s submission can be found here. In addition to concerns about areas of uncertainty and the possible transfer of liabilities (summarised above), ATT’s submission highlights issues with the definition of which engagers will be within the new rules, how information is transferred within the labour supply chain and the provisions concerning status disagreements.