Payroll
...reasonable care must be taken upon making a determination.
to tax and NICs under the off-payroll working rules. To summarise, the worker’s eligibility to statutory payments is derived from their employment with the intermediary. If the earnings reported meet at least the lower earnings level for class 1 NICs, and other qualifying conditions are met, then the worker will be entitled to statutory payments. In some scenarios, a worker could receive a portion of earnings subject to deductions under the off-payroll working rules, and some that have not. In determining entitlement to statutory payments, all earnings in relevant periods are taken into consideration, so both off- payroll working income and non-off-payroll working income are used for the purposes of establishing entitlement. Technical change to off-payroll working legislation The written statement, made in November by Jesse Norman, financial secretary to the Treasury, (http://bit.ly/38jByTE), confirmed that a technical change to the off-payroll working rules will be made in the next
Finance Bill. The amendment will ensure that the legislation operates in the way intended and will correct a previous unintended widening of the definition of an ‘intermediary’, which went beyond the intended scope of the policy. The change will be made to the NICs regulations once the Finance Bill has been introduced to Parliament, and this will be actioned prior to the introduction of the amendments to the off-payroll working rules on 6 April 2021. Status determination statements Businesses will need to begin establishing the status of workers engaged through their intermediary and every worker that they engage through an agency. The determination must be communicated via a status determination statement (SDS). The SDS, which must subsequently be provided to the worker and the person or organisation that a business contracts with, is to include the conclusion and
the reasons behind the decision. HMRC guidance asserts that reasonable care must be taken upon making a determination (see http://ow.ly/urBi30ro6X1). Although businesses can begin to prepare now, as a SDS can be issued prior to 6 April 2021 in circumstances where the rules apply, they will need to ensure that they keep detailed records of any employment status determinations, including the reasons for the determination and the fees paid. They must also make sure that they have appropriate processes in place through which to deal with any disagreements that arise from the determination. There will also be a need to confirm the size of the organisation in instances where the person or organisation that the business contracts with, or the worker, requests this information. HMRC’s check employment status for tax tool (http://ow.ly/drq630ro70u) can be used to assist in determining whether or not the off-payroll working rules apply to a contractor. n
Mediumand large organisations in all sectors of the economy will become responsible for assessing the employment status of individuals whowork for them. Make sure you are compliant with the legislation with our off-payroll working (IR35) webinar and off-payroll working (IR35) and other employment status considerations training course. OFF-PAYROLL WORKING (IR35)
Visit cipp.org.uk/training , email enquiries@cipp.org.uk or call 0121 712 1044 for more information.
cipp.org.uk @CIPP_UK
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| Professional in Payroll, Pensions and Reward |
Issue 67 | February 2021
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