Payroll
The potential workload for an organisation trying to comply with its off-payroll working obligations can be significant
The complexities of guidance To add further complication, HMRC is now expecting the end client to take extra precautions when dealing with supply chains involving agencies. In an October 2021 update, HMRC guidance warned that many umbrella companies are using disguised remuneration to make their offering attractive to workers using intermediaries. For example, they will claim that a worker can avoid tax on aspects of their pay, such as travel costs and other expenses, when this may not necessarily be the case. The guidance can be located here: http://ow.ly/U17S30s0Mq4. The guidance goes on to recommend that end clients rewrite their contracts with agencies so they have a right to check payslips and ensure that pay as you earn is being applied to the full amount earned. They also warn that many umbrella companies provide a UK ‘front’ for an overseas business, and that where the fee payer is based overseas, that tax and NI liabilities can pass up the chain to the end client. HMRC would like all engagers to have complete visibility over each engagement so that due diligence has been carried out on all entities in the supply chain. The level of commitment
Research HMRC commissioned IFF Research to carry out a survey across public bodies. We first saw this well over a year ago, so we anticipate that HMRC will publish its findings soon. In the meantime, the National Audit Office has recently announced its interest in off-payroll working. It is undergoing a review of how HMRC has implemented the rules. This promises to be an interesting exercise and the CIPP, which has been invited to participate, will provide readers with appropriate feedback in due course. PSTAX will be involved too, and making the same observations as covered in this article. n PSTAX has produced e-learning modules to help public bodies understand off-payroll working. Please visit https://hubs.ly/H0_pg0t0 for more details.
recommended by HMRC guidance could unwittingly lead to encouraging poor behaviours, such as: ● use of a blanket approach to determine whether workers are in or outside the scope of the rules ● routing all engagements through agencies and relying heavily on them for off-payroll working decisions ● leaving off-payroll working decisions to unsupported hiring managers where contracts are below set fee levels. Based on experiences at PSTAX, many local authorities and National Health Service Trusts are struggling to keep their heads above water on this topic. These are the bodies that are taking their obligations seriously. There are others who are light years behind and have no idea of the size and extent of the tax and NI liabilities they are generating through their inactivity.
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| Professional in Payroll, Pensions and Reward |
Issue 76 | December 2021 – January 2022
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