HMRC warn employers to prepare for off-payroll reforms

20 January 2020

HMRC are currently in the process of writing out to all businesses, that have been identified as being medium, to highlight the importance of readiness for the latest reforms to off-payroll working.

The off-payroll working rules make sure that individuals working like employees, but through an intermediary (usually their own limited company), pay broadly the same tax and National Insurance contributions (NICs) as individuals who are employed directly. The rules have been in place since 2000. Reform introduced in 2017 shifted responsibility for determining whether the rules apply from an individual’s company to the organisation they work for (often called “the client”) if that organisation was a public authority. The reform due to come into force on 6 April 2020 extends the 2017 rules to medium or large-sized organisations outside the public sector.

This is not a new tax: the changes are intended to improve compliance with the existing rules and to make sure those affected pay the right tax.

 To help ensure that businesses are getting ready for the reform, HMRC is writing directly to those likely to be impacted by them. The letter provides useful information and signposts resources for you and your contractors, including the link to sign up for one of the webinars HMRC are running over the next two months, which provide an update on the off-payroll working reform.

HMRC has also published a factsheet for contractors to explain how they might be affected, and what they might need to do before April 2020. Please share this with your contractors.

It is important that everyone in your organisation who might receive the letter is made aware of these direct communications, in the event, they are addressed to a colleague who may not be directly involved with the administration and payment of off-payroll workers.

Payroll professionals will be key to the successful delivery of these reforms and by working effectively, together with other colleagues, for example, HR, finance and procurement will ensure your employer’s successful delivery and compliance with this latest reform.

CIPP comment

The CIPP policy team want to hear of your experiences and readiness for off-payroll working reforms, please contact [email protected].


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