Policy hub
consultation and pose several questions that look to identify the impact change would have and to also identify what a ‘typical’ chain looks like for the majority? The off-payroll reforms have come about due to the belief held by HMRC that ‘wide-spread’ non-compliance exists with intermediaries (‘IR35’), and the increased pay as you earn revenue that was collected following off-payroll reform in the public sector is seen as evidence of success. The vast majority of organisations will comply with the new reforms. However, as with any new reforms HMRC believe there is a risk of non-compliance amongst the minority and plan to extend existing provisions within Part 2 of Chapter 10 of the Income Tax (Earnings and Pensions) Act 2003, to provide for the liability for income tax and NICs to be transferred from one party to another in certain circumstances. ● Status determination – The consultation provided details of the intention to strengthen the existing rules to provide both the fee-payer and the off-payroll worker with reasons for the status determination from the client. It is also proposed that the client may need to put in place a regulatory process that will allow disagreements to be resolved. It is intended that the client will have a certain amount of freedom to tailor the process within their wider business processes, whilst still maintaining consistency with other organisations. ● Pensions – HMRC is considering legislative options that will enable the fee-payer to make pension contributions to the off-payroll worker’s personal pension free of tax and NICs. If utilised this would see a deduction being made to gross pay before calculating NICs. HMRC is keen to know what impact this would have on administrative burdens and also how likely would it be for this option to be offered to the off-payroll worker and if offered would there be a demand for this option? ● Preparing for change – Whilst HMRC continue to affirm that the CEST service was ‘rigorously tested’ before reform was delivered to the public sector, continued criticism of the service has seen HMRC meet with stakeholders to address concerns and where possible enhance the service to support customers in making employment
...lessons may have been learned as HMRC have begun to publish new guidance... status decisions. As part of this work it is intended to improve guidance to ensure that the wide range of users, particularly those working through intermediaries, will be able to understand how and why the determination has been made. Much criticism was levied at HMRC with earlier off-payroll reforms and it would appear lessons may have been learned as HMRC have begun to publish new guidance to prompt preparation (http://bit.ly/2ZRih6X). This brief guidance prompts organisations to work across departments to: ❍ review current engagements, to ensure that any undertaking with intermediaries which may include personal service companies, agencies, or both, are identified ❍ put in place comprehensive processes, which will require multi- departmental involvement and co- operation to ensure consistency with status determination ❍ decide how status determination will be made; the CEST service can be used but so can suitably qualified professional advice ❍ review all onboarding and recruitment policies to ensure that they are robust enough to identify contracts that are captured by these latest reforms, and ❍ communicate with workers who are engaged through intermediaries to ensure they are aware of the change and how it may impact them. The survey responses together with anecdotal evidence provided at the policy think tank roundtable support the CIPP written response to this consultation, which can be accessed through the policy hub on the CIPP website: www.cipp.org.uk/my-cipp/ policy-hub.html . Annual review of the NMW As they celebrate twenty years of the national minimum wage (NMW), the
Low Pay Commission (LPC) conducted its annual review, seeking views from the widest possible range of contributors. To support the CIPP written response to the 2019 consultation, the policy team published a survey to collect views and opinions as to the: ● affordability of the national living wage (NLW) rate and the effects of an increase to the ‘on target’ rate for April 2020 – currently around £8.67 ● evidence of the impact of increases in the NLW since its introduction – including the April 2019 uprating – on workers, employers, the labour market and the economy ● evidence of how employers are seeking to improve productivity ● evidence on how the economic outlook is affected by the process of leaving the European Union. The LPC in consideration of all other rates which impact workers under 25 and apprentices was also seeking evidence to make recommendations on its traditional basis which is helping raise the pay for as many low-paid workers as possible without damaging their employment prospects. In addition to this consultation, the LPC has had its annual programme of visits around the UK which allows the Commissioners to hear directly from workers and businesses as to how their minimum wage recommendations are working ‘on the ground’. The policy team also held a think tank roundtable last month in Leeds to provide Full, Fellow and Chartered members the opportunity to share their views and opinions. n The survey responses together with anecdotal evidence provided at the roundtable support the CIPP written response to this consultation, which can be accessed through the Policy hub on the CIPP website: www.cipp. org.uk/my-cipp/policy-hub.html .
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| Professional in Payroll, Pensions and Reward |
Issue 51 | June 2019
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