Royaume-Uni & Europe
Emploi, pensions et immigration
HMRC has published a policy paper and consultation document on extending the off-payroll working rules to the private sector from 6 April 2020. The consultation envisages that the new rules will only apply to large and medium sized businesses so it is likely that businesses with less than 50 employees or an annual turnover of less than £10.2 million will not be caught.
What are the off pay-roll working rules?
The off pay-roll working rules are designed to help the Exchequer collect tax and NICs more effectively when contractors supply their services to a client through an intermediary such as a personal service company (PSC). For large and medium sized clients, the rules will replace IR35 which was introduced for the same reasons but has not been particularly successful. Under IR35, the PSC has to account to HMRC for income tax and NICs if the contractor has "deemed employment status". A contractor is considered in "deemed employment" where, but for the PSC, they would have been regarded as an employee of the client engaging them. This involves a consideration of the nature of the work performed and the terms under which it's performed.
Under the off pay-roll working rules, the entity which pays the PSC (the fee payer) will take over the role of paying HMRC the tax and NICs. The client has new responsibilities to determine the employment status of the contractor and therefore to determine whether the off payroll working rules apply.
The rules were introduced in the public sector in April 2017 and it is now proposed that they will be introduced in the private sector in April 2020.
What does this note cover?
This note outlines the key proposals contained in HMRC's consultation which seeks views on how the off payroll working rules should be amended so that they apply to the private sector. For more detail on the background to these rules and how they currently apply in the public sector, see our summary.
What are the key changes proposed in the consultation?
Although the private sector rules will be based on the public sector rules (which came into force in April 2017), this new consultation is proposing some changes in line with feedback received on certain practical aspects of the rules. The key proposed changes, which if implemented will also be made to the public sector rules, are as follows:
The consultation will close on 28 May 2019 but organisations affected by the reform shouldn't wait until the outcome to take initial steps to prepare. HMRC recommends taking the following actions now to prepare for the reforms: