From April 2020 the responsibility for determining whether engagements with individuals who provide their services through an intermediary (typically a “PSC”) are within the off-payroll working rules shifts to the client for engagements in the Private Sector, with the burden of operating PAYE and collecting National Insurance Contributions (“NICs”) falling on the relevant “fee payer” in the work supply chain.
Although it is encouraging that HMRC have reconfirmed that it does not intend to carry out targeted campaigns into previous years when individuals start paying employment taxes following the reforms, we expect that HMRC will take a robust approach to the enforcement of the new rules.
There is an enormous amount of work to be done across the private sector to ensure that medium/large businesses who are dependent on a flexible workforce are ready in time for the changes in April 2020.
Status determination and communications
When clients have determined an individual’s status for the off-payroll working rules, the client will be required to pass the determination to the party they directly contract with, as well as the individual worker. Significantly, clients will also need to provide reasons for the determination.
It is hoped this will be an incentive to clients to take care in making determinations – reducing the risk of “blanket” assessments and limiting status disputes.
Businesses must therefore adopt internal policies to make proper status determinations for engagements and communicate these to individuals and their contract counterparties effectively.
HMRC promise plenty of guidance, targeted communications as well