HMRC publishes Agent Update 77
16 April 2020
The latest Agent Update issue has been published by HMRC and includes articles that discuss the delay to the off-payroll working rules, updated guidance on disguised remuneration, Construction Industry Scheme (CIS) filing dates and refunds and questions that should be asked of cyber security experts.
The Agent Update is published by HMRC as part of its Working Together programme for Agents and provides a wide range of updates that span all tax types.
There is a caveat that, as with everything at the moment, guidance is constantly being updated to help support businesses and individuals through the outbreak of COVID-19, and the issue includes the most up-to-date information that was available prior to going to publication.
Delay to off-payroll working reforms
The article that discusses the delay to off-payroll working reforms from the intended date of 6 April 2020 to 6 April 2021 explains that contractors working through their own limited company and providing services to non-public sector organisations will continue to have the responsibility for operating existing off-payroll working rules, which came into force in 2000. This means that contractors will need to decide whether they are employed or self-employed for tax purposes, and in tax year 2020-21, organisations in these sectors will not need to make this decision, issue Status Determination Statements (SDS) or deduct income tax and National Insurance (NI) contributions prior to paying fees to contractors who work through their own limited company. Payroll only needs to be operated for individuals who are now employed directly and no longer provide services for an organisation as a contractor through their own limited company. Within payroll software, there will be an ‘off-payroll worker subject to the rules’ indicator in PAYE RTI, but organisations in the private and third sector should refrain from using this indicator and not use payrolling software to make payments to a contractors own limited company in tax year 2020-21.
Off-payroll working rules introduced to the public sector in April 2017 will continue to operate as they do now. Additional duties that were intended to be implemented from 6 April 2020 will no longer need to be completed during tax year 2020-21, including the requirement to produce an SDS and provide it to the worker and first party in the contractual chain. There will no longer need to be a status disagreement process in place. These requirements will now take effect from 6 April 2021. From 11 May 2020, however, for public authorities or agents, on contracts which fall inside the off-payroll working rules, there will be a requirement to start using the ‘off-payroll worker subject to the rules’ indicator in PAYE RTI. Although this isn’t mandatory until 11 May 2020, the function will be available from 6 April 2020.
Guidance on disguised remuneration
In response to the Independent Loan Charge Review, the government made several changes to the policy which meant that certain disguised remuneration loans previously subject to the loan charge will now no longer be within the rules outlined in the original policy. Individuals who are subject to the loan charge should read the guidance to check if they still need to report and pay the loan charge. Draft legislation and a draft scheme have been published, relating to the refund of certain voluntary payments made on or after 16 March 2016 as part of a settlement with HMRC in relation to loans made in unprotected years.
Those who are entitled to a refund of voluntary restitution will be written to and invited to make a claim once the Finance Bill receives Royal Assent. It is anticipated this will be in Summer 2020 but this does not consider the delays which could be caused due to coronavirus. Claims for refunds cannot be processed until legislation has been enacted.
Spotlight 54 highlighted the fact that tax avoidance promoters were targeting NHS workers returning to help with the fight against coronavirus.
For anyone who is experiencing problems paying tax due to COVID-19, and are concerned about being able to pay their loan charge or disguised remuneration settlement, HMRC can agree instalment arrangements with them. The arrangements will be made on a case-by-case basis and will be tailored to meet individual circumstances.
Construction Industry Scheme (CIS) – filing dates and refunds
Limited company subcontractors can off-set CIS deductions suffered against tax and National Insurance (NI) payments due for their employees, and CIS deductions from their subcontractors. This can be done on either a monthly or quarterly basis, and the calculation included on the monthly Employer Payment Summary (EPS) return.
At tax year-end, once HMRC have received the final EPS and Full Payment Submissions (FPS), excess CIS deductions that cannot be offset may be refunded against any Corporation Tax or VAT due. The amounts offset must be recorded.
Refunds aren’t processed until 24 April and it can take up to 40 working days for repayments to be made. A repayment can be claimed online where the company has a Government Gateway user ID and password, but if a company does not have a user ID, one can be created when they claim online. Where repayments must be made to an agent or other nominated representative, the claim must be made by post using a R38 form.
There is also much more information to digest, so it is advisable to familiarise yourself with the content of the latest Agent Update.
The information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our Coronavirus hub.