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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 [check employment status for tax] 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 following statistics from the survey support the need for further consultation: ● 74% of contractor respondents who have used CEST believe it to be inaccurate ● 64% anticipate needing professional advice as a result of any reform within the private and third sectors ● 69% are not confident that their clients will have the capacity, knowledge or resources to be able to make a correct status determination ● 56% plan to seek only contracts in the private and voluntary sectors in which the off-payroll rules do not apply ● 47% believe that voluntary and charitable organisations will struggle to deliver IR35 reform with 44% believing that the construction industry will also struggle significantly. The full joint consultation response can be found here: https://bit.ly/2wehgZx. STBVs from overseas Another consultation which was published in May affects only employers dealing with the tax and administrative treatment of short-term business visitors (STBVs) from foreign permanent establishments (‘overseas branches’) of UK companies. In the consultation the government looked at two broad policy options of how change could be introduced to ease the administrative burden on employers: ● extending the pay as you earn (PAYE) special arrangement UK workday rule ● new tax exemption for STBVs from overseas branches. To provide feedback, over and above comments shared during a HMRC roundtable, throughout July the policy team ran a survey of our members and the wider payroll profession. The survey
findings, where relevant, were used to support our answers. The survey received ten responses in total, which is insignificant in contrast to the numbers that we would expect from our membership base; however, we know from other research that over 20% of our membership base manage international payrolls in addition to their UK payrolls. It is believed that the response level reflects an apathy amongst affected employers when it comes to compliance with the significant administrative burden, and thus there is a perception that this holds less importance than other tax and reporting obligations and is simply an ‘unnecessary’ significant administrative burden. ... not close the childcare voucher scheme without knowing its impact on working parents Whilst not covered within this consultation, the 19 April deadline for the STBV PAYE special arrangements is impractical and results in the annual need for submission of earlier year update returns. We would call for further consultation in this area that will result in a significant extension to the deadline for STBV PAYE special arrangement. There are benefits to be gained by the implementation of both options – we don’t see this as an ‘and/or’ choice. Consideration should be given to consulting further on greater alignment with definitions and numbers (e.g. day counts between different processes that are unique to affected employers). The CIPP supports the calls for greater alignment but recognises the challenge to employers of recording all days of presence such as personal holidays that may not currently be recorded in relevant company systems. The imminent departure of the UK from the European Union will have a significant impact on business visitors generally but more specifically the impact on National Insurance costs is the cause of significant unrest. We are aware that this falls outside of the current consultation and that much is unknown at this juncture, but are minded that the employer population affected by the proposals will be impacted
significantly and so look forward to open consultation and discussion as to how working policies and practices will need to be adapted. The survey results can be found here: https://bit.ly/2wehgZx. Childcare vouchers The pleas to keep childcare voucher schemes open to new entrants beyond the extension to October, until effects of scrapping are known, continue. In June, the chair of the Treasury Committee wrote to the chief secretary of the Treasury to convey the committee’s disappointment with the government’s response to some of its recommendations (https://bit. ly/2MNPOuX). When the committee asked the chief secretary to provide an economic analysis of who will gain and who will lose from the transition from vouchers to tax-free childcare (TFC), she was unable to do so. The government has also failed to provide, when asked, a comparison between the programme and administrative costs of the two schemes. In the letter, the committee chair states the committee “was clear in its recommendation that the government should not close the childcare voucher scheme without knowing its impact on working parents. By carrying out a post- implementation review of tax-free childcare two years after its commencement, the government will be ending childcare vouchers – a scheme that has been extremely popular with working families – without seeking to understand what the consequences will be. “As was evident from the 2017–18 HMRC Supplementary Estimate, and the OBR’s November 2017 Economic and Fiscal Forecast, the uptake of [TFC] has been 90 per cent lower than the government had expected. “The committee again urges the government to reconsider the committee’s recommendation and commit to publishing an analysis of the take-up of [TFC] compared to the continued use of childcare vouchers during the first year of the scheme – and the subsequent impact on households – prior to making a decision on whether to discontinue vouchers in October 2018.” At the time of writing, government has not made any further comment on this contentious issue. n
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| Professional in Payroll, Pensions and Reward |
Issue 44 | October 2018
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