Countdown to off-payroll rules change
The extension of the public sector off -payroll working rules (known as IR35) to the private sector is still set to go ahead in April 2020, despite the postponement of the Budget and a call from the Federation of Small Businesses (FSB) for the change to be delayed.
However, in January the government launched a review of the proposed changes to address concerns from businesses and affected individuals about how they will actually work. The review will determine if any further steps can be taken to ensure the smooth and successful implementation of the reforms.
The rules apply where a worker provides services through an intermediary – usually their own personal service company. Such workers would have been classed as an employee if they had worked directly for the end user of the services.
Where the end user is a public sector organisation, that organisation is responsible for determining the worker’s employment status. From 6 April 2020, medium and large private sector and third sector organisations (e.g. charities) will also have to determine the employment status of contract workers.
If the worker is deemed an employee, the end user must inform the organisation that pays the intermediary, which must then account to HMRC for tax and national insurance contributions. The intermediary and worker will be able to challenge the decision.
Determining employment status can be difficult. HMRC offers a ‘check employment status for tax’ (CEST) tool designed to enable workers and hiring organisations to decide whether an engagement is an employment for tax purposes. A recent case was brought against Helen Fospero, a TV presenter. Although she was required to perform the services personally, and ITV retained editorial control over her programmes, other factors pointed towards self-employment and HMRC lost the case.
If you think you may be affected by the changing rules, get in touch.
