Technical changes to Off-Payroll working legislation

05 March 2021

With many hoping that the off-payroll reforms would once again be postponed, the announcement in Wednesday’s Budget confirmed that this would not be the case.

Within the upcoming Finance Bill, the Government confirmed that technical changes will be made to the off-payroll working legislation to ensure the rules that will be operated are as intended from 6 April 2021.

These technical changes include:

  • A new provision to address the unintentional widening of the definition of an intermediary, where it is a company. This provision states that the company will meet the conditions of an intermediary where the worker has a less than material interest, but only where the payment the worker will receive would not already be taxed as employment income. What this means is that umbrella companies, agencies and other third-party companies providing a worker’s services will not be in scope of the rules
  • A Targeted Anti-Avoidance Rule (TAAR) to prevent against arrangements devised to bypass the definition of an intermediary to gain a tax advantage. This is in response to stakeholder feedback that some promotors may look for new ways to avoid the conditions
  • Stakeholders also identified two further changes which would improve the operation of the rules. The first is a minor change to allow an intermediary to confirm if one of the conditions for an intermediary is met, where the worker has not done so. The intention is that this will make it easier for client organisations to determine whether or not they need to consider the rules
  • A further change to extend the consequences of providing fraudulent information to include any UK-based party in the labour supply chain. What this means is that, where someone other than the worker provides fraudulent information claiming that the rules do not apply, the subsequent liability will rest with that party instead of the client organisation or deemed employer.

The changes have been made under a Provisional Collection of Taxes Act (PCTA) resolution, and they will have effect from 6 April 2021, alongside the rest of the rules. Extended details of the legislative provisions can be located here.

These technical changes have been published by HMRC via a Tax Information and Impact Note (TIIN), which can be accessed here. These changes will not have any additional impacts for engagements that were already in scope of the rules.

HMRC has also published a revised TIIN for the wider reform, which updates the policy costing to reflect the one-year delay to April 2021 and contains a revised assessment of the administrative burdens on businesses. This can be located here.

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