House of Lords: a call for evidence: the off payroll working rules
06 February 2020
In order to consider all elements of the draft Finance Bill, a Finance Bill Sub-Committee, chaired by Lord Fosryth, is created each year to consult on it, and to focus on the areas of tax administration, clarification and simplification.
The original draft Finance Bill was published on 9 July 2019 to ensure that the contents could be confirmed by the Autumn 2019 Budget, but this was postponed due to the general election, and the Finance Bill is now expected to be published shortly after the Budget, which will be delivered in March 2020.
The intention to roll out the off payroll working rules to any businesses deemed as being medium and large within the private sector was confirmed by the Government who stated that the provisions to do this would be included within the Finance Bill. This is an area of interest for the Sub-Committee and they will be scrutinising the changes to the rules and have requested evidence which demonstrates the effect on workers and the broader labour market.
Payroll professionals and members of the CIPP will have heard much discussion of the IR35 reforms, which will require organisations, who engage a contractor(s) via an intermediary such as the contractor's Personal Service Company (PSC), review the employment status of the contractor(s) to establish whether or not the contract gives rise to a 'deemed employment' . Where it does, they (or the fee payer where different) will need to deduct tax and National Insurance Contributions (NICs) on any payments they make to that individual.
The Sub-Committee welcomes feedback from both individuals and organisations in the form of written responses and documentation to evidence those responses. The deadline for the submission of any information is 25 February 2020. Once the responses have been collated, they will work as a basis for recommendations which will be laid out in front of the House of Lords.
The questions are as follows:
- What has been the experience of the new off-payroll rules in the public sector? What lessons have been learned from this experience, and how have they affected the draft Finance Bill proposals?
- Has the impact of the extension of the off-payroll rules to the private sector been adequately assessed? Is the assessment that has been made of the compliance burden (including costs) of these new rules realistic? Has the right balance been struck in the compliance burden on the taxpayer and on HMRC?
- Is the exclusion of small organisations sufficiently robust, and how might small organisations gain sufficient assurances that they fall within the exclusion?
- What will be the effect of these new measures on a chain of contractors and subcontractors?
- What scope might there be for simplifying or otherwise reducing the administrative burden of these measures? What should HMRC do to help businesses understand the new administrative rules?
- Are the tests for determining employment for the purposes of these rules sufficiently clear to both engager and worker? Do they reflect the reality of the contracting environment?
- What is your assessment of the Check Employment Status for Tax (CEST) tool? Does it require improvement? If so, how might it be improved?
- How effective will the status determination process be in resolving issues of employment status? Are there adequate safeguards, allowing decisions to be challenged? If not, what more is needed?
- Are there better or simpler ways in which the objective of the new rules might be achieved? If so, what are they?
- Will the Bill, as drafted, achieve the Government’s objectives?
- What is your view of the role of umbrella companies in the context of these proposals?
- How do the new measures relate to the wider context of changes in working arrangements, including the “gig economy”? Is it fair that some individuals are taxed as if they are employees, but do not have the rights of employees?
The CIPP will respond to the call for evidence. If you have any information, experience or evidence that you would like us to include in our submission, relating to any of the questions included above, then please email CIPP senior policy and research officer [email protected].
Alternatively, if you have any further feedback or areas of concern, then similarly, please email Samantha Mann at the same email address. Thank you in advance.
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