MEMBERSHIP INSIGHT
On your behalf
Policy team update
Diana Bruce MCIPPdip, CIPP senior policy liaison officer, provides an update on recent developments
Off-payroll working An important consultation was published back in May which sought views on the best way to tackle non-compliance with the off-payroll working rules (‘IR35’) in the private sector. This provided options for changes, but the government was also interested to hear how the rules as they currently apply in the public sector could be adapted to fit the needs of the private sector. The CIPP policy team joined forces with the Chartered Institute of Personnel and Development (CIPD) to inform our response to this consultation. We published two joint surveys to our respective members and to the wider human resources (HR) and payroll profession which ran throughout July and were aimed specifically at HR and payroll practitioners and HR and payroll contractors. In addition to the surveys, the CIPP – together with representatives from HM Revenue & Customs (HMRC) – held a roundtable to gather anecdotal evidence and views directly of HR and payroll practitioners. The CIPD together with the Association of Independent Professionals and the Self-Employed (IPSE) held a workshop of HR/payroll and non-HR/ payroll contractors to gain their insights about the proposals. (We extend thanks to those who took time out of their busy schedules to respond and take part in these meetings.) Some of the key findings are not surprising as although IR35 has moved into day to day operations for the public
sector, for many in the private sector it is still a specialised area. Of those who responded: ● 53% have little or no knowledge of the current rules of IR35 for contractors operating within the private and voluntary sectors ● 79% don’t believe they have the capacity, knowledge or resources to deliver the preferred option in the private and third sectors ...79% don’t believe they have ● 59% currently have limited or no responsibility for determining IR35 status and a further 64% have limited or no responsibility for making payments to contractors captured as a result of an IR35 determination ● 91% believe that they will need some level of support from HMRC to determine status with only 9% believing that they would need no support at all from HMRC ● 69% will require written guidance and specialist knowledge from HMRC ● though 30% currently have yet to understand the impact the reforms would have on them, 45% already know that they would need to enlist support of a third-party organisation to assist in making an IR35 determination. These statistics show how much of the capacity, knowledge or resources...
an education piece it will be for the private sector to take on the IR35 rules. In addition: ● Over 69% currently employ the services of an individual via an intermediary such as a personal service company ● 42% know a fair amount or know well about the impact and operation of IR35 within the public sector ● 82% expect contractor charges will increase, with 86% expecting increased ‘employer costs’ and workload (89%) as a result of reform (similar to that of the public sector) being rolled out to the private and third sectors. Importantly, 55% of respondents believe that a phased delivery of any reform is necessary to ensure widespread awareness and understanding of the ultimate implications. This is an opinion shared by many organisations, including the CIPP and the CIPD. Commenting on the findings, 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 changes gradually and in recognition of the range of employer size and complexity within the private sector, Samantha Mann, CIPP senior policy and research
| Professional in Payroll, Pensions and Reward | October 2018 | Issue 44 4
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