Off-payroll working rules
Executive summary
- AAT remains concerned at the frequency of high-profile IR35 cases being lost by HMRC at tribunal. Recognising that simply adopting the same approach in the private sector risks considerably more high-profile losses for HMRC, more inconvenience and uncertainty for employers and contractors, reputational damage for HMRC and increased losses for the taxpayer; AAT urges HMRC to make necessary changes.
- In light of the above, AAT welcomes the decision to defer changes originally intended for application in April 2019 until 2020. This will also enable more time for affected parties to prepare, which should in turn increase compliance and reduce likely problems. This is also in line with AAT’s previous recommendations submitted to HMRC in May 2018.
- AAT also welcomes the proposal to introduce a requirement to pass either the client’s determination, or reasons for the determination, down through the labour supply chain. This addresses a significant shortcoming in the 2017 public sector off-payroll legislation.
- AAT’s believes that more could be done to explain why a client needs to be aware of who is the fee-payer in the supply-chain. The desired outcome could just as easily be achieved by placing a statutory requirement on the lead-agency to maintain full knowledge of all parties in the labour supply chain.
- AAT has previously warned that the failure to include a statutory appeal process in the 2017 legislation was a serious oversight. This left many workers exposed to inappropriate decisions or even the subject of a blanket employment status decision without a right of appeal. As a result, addressing this oversight is a most welcome development.
Related consultation responses
Off-payroll working: calculation of PAYE liability in cases of non-compliance
Most AAT members consulted on these proposals welcomed them but differed in their views on the level of impact they would have.
IR35 off-payroll working
The exemption from IR35 for small businesses was attractive but its definition of “small” created problems. The solution has created more complexity.
