Be aware of the HMRC Employment Status questionnaire!

Mon 02 Sep 2019

If you have 50 employees or more, you are likely to receive the following from HMRC as they begin their knowledge sharing of the off-payroll changes for medium and large organisations in the private sector effective from April 2020:

• a questionnaire to complete; and  
• an opportunity for an educational telephone discussion with HMRC.

These are not being labelled as mandatory compliance visits or reviews but we recommend careful thought and preparation before responding to HMRC. This is being done as HMRC seek to improve on the information they shared ahead the roll out for the public sector in 2017.

Furthermore, for organisations that are required to have Senior Accounting Officers, HMRC will seek more detailed discussions that are similar in approach to Know Your Customer visits.

Am I affected if I get contacted?

For completeness, it should be noted not every organisation that receives HMRC correspondence may be impacted by these changes. Organisations that meet two out of the following three measures are outside the scope of the legislative changes:

• annual turnover not more than £10.2 million;
• balance sheet total not more than £5.1 million; and
• the number of employees not more than 50.

For example, when an organisation has more than 50 employees but an annual turnover less than £10.2m and a balance sheet total of £5.1m or less, it will remain outside the scope of the legislation. However, where individuals are engaged directly (not via an intermediary / Personal Service Company) the organisation will still need to ensure it has effective controls to manage and govern its employment status risk.

What will you do?

The cynic would consider HMRC to be starting their review process early. The optimist would welcome this as HMRC trying to improve its information sharing process.

Whichever side of the line you are on, given we are little more than 6 months away from these changes taking place, we strongly recommended organisations to review and assess their off-payroll workforce, and enhance and introduce more robust governance between now and April 2020 where deficiencies are found.

We are helping organisations with such reviews ensuring an achievable project plan is put in place and to also be pro-active and get ready for the changes given that the information provided by HMRC may not be detailed or tailored enough to help organisations proactively manage the changes and review required.

Please get in touch if you’d like to know more by contacting our Employment Tax team.

For further comment, please also read our recent article.