• 74% of contractor respondents who have used the Check Employment Status for Tax (CEST) tool believe it to be inaccurate • 64% of contractor respondents anticipate needing professional advice as a result of any reform within the private and third sectors • 69% of contractor respondents are not confident that their clients will have the capacity, knowledge or resources to be able to make a correct status determination • 56% of contractor respondents plan to only seek contracts in the private and voluntary sectors in which the off-payroll rules do not apply • 47% of contractor respondents believe that voluntary and charitable organisations will struggle to deliver IR35 reform with 44% believing that the Construction industry will also struggle significantly
Commenting on the joint response, Charles Cotton, senior CIPD adviser, performance and reward said:
“Based on what both payroll and HR practitioners and contractors have told us, the CIPD and CIPP strongly recommend that changes to the existing off-payroll working rules for engagements in the private sector will need to be implemented gradually to ensure that firms and the industry have enough time to amend their existing processes.”
In full agreement of the need to phase any changes in gradually and in recognition of the range of employer size and complexity within the Private Sector, Samantha Mann, CIPP senior policy and research officer highlighted:
“If the ‘preferred option’ is chosen then HMRC will share significant resource challenges to deliver knowledgeable customer service across all service lines together with information and materials that recognise the differing needs of the increased IR35 customer base.” “Our findings also confirm that whilst the CEST tool is largely seen to be an improvement on its predecessor, before further reform is considered, thorough user evidence research together with a review of how CEST operates and ideally through public consultation, should be carried out so as to increase the number of reliable determinations”
The full consultation response can be found in the Policy hub under My CIPP on our website.
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Reform of off-payroll working rules (IR35) continues 31 October 2018
There were several subjects that were high on the ‘predictions’ agenda prior to the 2018 Autumn Budget. The continued roll out of off-payroll working into the Private Sector was one of those subjects.
A fact sheet has been published by HMRC to summarise the changes that will come in from 6 April 2020 for medium and large private sector businesses.
HMRC estimates the cost of non-compliance to the exchequer will reach £1.3 billion a year by 2023-24 and by continuing with these reforms, that will require private sector businesses to assess an individual’s employment status, compliance will increase.
The reforms will bring the private sector in line with the public sector, where HMRC estimates the reform has already raised £550 million in income tax and NICs in its first year of operation.
The genuinely self employed will not be affected by these reforms and the existing rules will continue to apply to the 1.5 million smallest businesses.
What does the reform mean for businesses?
From 6 April 2020, medium and large businesses will need to decide whether the rules apply to an engagement with individuals who work through their own company.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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