Action required following HMRC review of off-payroll working in the private sector

Fri 28 Feb 2020

HMRC has now concluded its review into the implementation of the off payroll workers legislation from 6 April 2020. As anticipated, no delay has been announced and the legislation will take effect from 6 April 2020. In order to ensure a ‘smooth’ implementation the following announcements have been made by HMRC:

• HMRC will not issue any penalties for errors relating to off-payroll workers in the first year, except in cases of deliberate non-compliance.
• As previously announced, information resulting from changes to the rules will not be used to open new investigations into a worker’s personal service company for tax years prior to 6 April 2020, unless they suspect fraud or criminal behaviour. 
• Also, as already announced the new rules will only apply to services carried out from 6 April 2020, rather than all payments from 6 April 2020.
• There will be a legal obligation on end clients to respond to a request for information about their size from an agency or worker.
• HMRC has announced that amendments will be made to the OPW legislation from 6 April 2020, in relation to how the rules will apply to off-shore companies. We await further detail in relation to this in due course.

Now that we have certainty that the legislation will apply from 6 April 2020, it is imperative that processes are in place to ensure you are compliant with the new rules from 6 April 2020. Although penalties will not be levied in the first year for non-deliberate errors, any underpayment of PAYE and NIC will still be sought from the engager from this date.

What should we do next?

In terms of the immediate actions which should be taken, these include:

1. Identify worker population providing their services via an intermediary and therefore caught under the off payroll

2. Undertake status determination reviews on the workers identified from the above review.

3. Issue status determination statements (SDS) to all workers identified (and the Agency where they are the feepayer), stating whether they are deemed as within IR35 giving adequate reasons.

4. Have procedures in place to respond to any disputes raised by the workers, including adequately responding to the workers’ representations, and issuing a revised SDS where required.

5. Update payroll procedures to ensure PAYE and NIC is withheld on the correct amount of the workers payment, as well as ensuring Employers NIC and Apprenticeship Levy (if applicable) is paid over to HMRC.

We have a range of technology solutions, including a status determination tool which will help demonstrate that reasonable care has been taken in reaching the decision included on the SDS, which is a key requirement to ensure a valid SDS has been produced.

Please do not hesitate to contact a member of the Mazars employment tax team or your usual Mazars contact to discuss matters further.