The Association of Taxation Technicians (ATT) is urging HMRC to rethink the off-payroll working rules that will be extended to the private sector from April 2020.
ATT’s concerns are set out in its recent response to an HMRC consultation1 which seeks views on how the rules which have applied to the off-payroll engagement of workers in the public sector since April 2017, should be introduced into the private sector from April 2020.
A key concern identified by ATT is that the proposed rules may encourage end-user clients (the engager to whom a worker provides services) to make blanket decisions to classify workers as employees for the purposes of tax, without properly considering all the factors that are relevant to the particular contract. Such decisions can cause significant tax difficulties for individuals providing services. That concern is heightened by the proposal that the end-user client could incur liability for any unpaid tax relating to the contract even if the client had properly met their own obligations.
The ATT has suggested that such risk-averse determinations could be discouraged by a combination of significant improvement to HMRC’s Check Employment Status for Tax (CEST) service, additional resourcing of a dedicated HMRC Helpline, a requirement that all determinations had to include a declaration that the client had taken all reasonable steps to ascertain the relevant facts and a requirement for the determination to have considered the CEST service.
Michael Steed, Co-Chair of ATT’s Technical Steering Group, said:
“We have heard many reports since April 2017 of end-user clients in the public sector making blanket decisions which did not take proper account of all the factors relevant to a contract. Rolling out the amended rules to the larger and much more diverse private sector without significantly improving the CEST service so that it delivers reliable and respected status conclusions, could cause significant disruption in both the labour market and the tax system.
“It is essential that the process which is to be introduced from April 2020 (and will apply to both the public and private sectors) is properly thought through. There is an opportunity here for HMRC to consider all the suggestions put forward by stakeholders and bodies such as the ATT and produce rules which will produce mutual benefits and minimise the potential damage to labour supply chains.”
Notes for editors
- ATT’s response to HMRC’s consultation Off-payroll working rules from April 2020 can be found here.