CIPP webcast on off-payroll working (IR35) in the private sector 29 May 2018
Listen to a short webcast to find out what options are being considered in the consultation on how to tackle non- compliance with the off-payroll working rules in the private sector.
In the Autumn Budget 2017, the government announced it would consult on how to tackle non-compliance with the off- payroll working rules in the private sector and that consultation has now been published.
HMRC estimates that currently only around 10% of people who should comply with the off-payroll working rules do so. The cost of non-compliance in the private sector is growing and is estimated that it will reach £1.2 billion a year by 2022/23. The consultation provides an early evaluation of the public sector reform which external research on initial implementation shows that the reform has had relatively little impact on projects or vacancy filling in the public sector. Within the consultation it provides options for changes to the off-payroll working rules for engagements in the private sector.
Listen to our short webcast to find out what the consultation is all about. The Policy team will also be publishing a survey in due course to gather your views and experience to help inform our response.
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HMRC research into off-payroll reform in the public sector 26 June 2018
IFF Research and Frontier Economics were commissioned by HMRC to gather evidence on experiences of the public sector bodies in implementing the reforms. The research considered implications for employment, costs incurred and any process changes required.
To follow is a summary of the report; however the full report can be accessed here.
Introduction The off-payroll working rules, also known as IR35 or intermediaries legislation, were originally introduced in April 2000 as a counter tax-avoidance measure. The rules ensure that, where an individual would have been an employee if they were providing their services directly rather than through an intermediary, such as a Personal Service Company (PSC), they pay broadly the same tax and National Insurance Contributions (NICs) as an employee. The Finance Act 2017 introduced reforms to how the off-payroll rules operate in the public sector from 6 April 2017. Where a public authority engages a worker through an intermediary, the responsibility for deciding whether the rules apply was transferred from the contractor’s intermediary (their own PSC) to the public authority. If the rules apply, and the public authority is directly engaging the contractor’s PSC, the public authority are required to deduct the relevant income tax and NICs before making any payments. If the contractor is engaged through an agency, the public authority will pass on their decision and the agency who are paying the contractor’s intermediary are then required to deduct the relevant income tax and NICs before making any payments. The reforms were expected to increase the employment taxes collected on behalf of individuals who, pre-reform, were off-payroll contractors working through an intermediary, such as their own PSC. Contractors affected by the reforms could pursue a number of alternatives to continuing to work through their PSC within the off-payroll working rules. For example, becoming an employee of the public body or an employment agency, moving to work through an umbrella company, or leaving their role (potentially for a self-employed role in the public sector, a role in the private sector, or stopping working altogether). It is possible that some contractors may have sought increases in their pay rates to cover the relevant employment taxes. Research IFF Research and Frontier Economics were commissioned by HMRC to gather evidence on experiences of the public sector bodies in implementing the reforms. The research looked at the key sectors of Public Administration & Defence,
The Chartered Institute of Payroll Professionals
Payroll: need to know
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