HMRC announces substantial change to the off-payroll working rules, ahead of the 6 April 2020 implementation date 10 February 2020 HMRC has announced that, as part of its review into the changes to the operation of the off-payroll working rules, the rules will now only be applicable to payments made for services provided on or after 6 April 2020, as opposed to any payments made on or after 6 April 2020. The previous rules would have applied to payments made on or after 6 April 2020, regardless of when the services were provided. This means that determinations by medium and large organisations are only required on contracts that are due to continue past 6 April 2020. These changes have been communicated to the public prior to the publication of the findings of the Government’s review to show that the concerns of businesses in relation to what payment the rules apply to, and from when, have been considered. The early disclosure was intended to give businesses more time to prepare to enable successful implementation of the reforms, and to provide more clarity on the issue. HMRC will be communicating the changes to businesses via updated guidance and will continue to deliver education and support products to aid understanding. Individuals who have already attended webinars or one-to-one engagements will be written to, to confirm the changes. HMRC has also stated that this change will have no effect on public sector organisations who are already operating off-payroll working rules.
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New draft guidance relating to IR35 reforms published by HMRC – what is ‘reasonable care’? 10 February 2020 After much anticipation, and a technical glitch which meant that information was provided and then swiftly taken away as it was published too early, HMRC has finally released comprehensive guidance in relation to the IR35 reforms that will be implemented from 6 April 2020. Substantial ground is covered but four areas which have been discussed in much detail include defining ‘reasonable care’, Status Determination Statements (SDS), the client-disagreement process and outsourced service. An overview of ‘reasonable care’ is as follows.
Reasonable care
There has been much emphasis on the fact that clients must employ ‘reasonable care’ when making the decision as to whether or not a worker would have been classed an employee, had they been engaged directly, and not through an intermediary. Whilst there has been high level discussion of what would satisfy a definition of ‘reasonable care’, nothing has been as informative as the guidance provided on the topic by HMRC this week.
To neglect to use ‘reasonable care’ can leave the client responsible for tax and NIC liabilities, along with payments relating to the Apprenticeship Levy.
HMRC will consider ‘reasonable care’ in light of a client’s abilities, experience and circumstances, so higher levels of care would need to be undertaken by large multi-national companies than by much smaller businesses with less access to resource.
A Statement Determination Status (SDS) needs to be completed for each relevant employee and records of them need to be retained to demonstrate how each decision was reached.
Examples of sufficient ‘reasonable care’ being taken are listed, but the list is not exhaustive:
• Accurately applying and keeping a record of the employment status principles (ESM0500). • Accurately completing HMRC’s Check Employment Status for Tax (CEST) tool
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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