“‘Mutuality of obligation’ (MoO) is a term often used to describe the basic obligations that exist between a hirer and a worker. These basic obligations are where the hirer is obliged to pay remuneration, of any kind, and the worker is obliged to provide their work or skill in return. MoO is important because without it there can be no contract for the supply of a worker. CEST does account for MoO on these terms and is clear in guidance to users that it can only be used to determine employment status for tax where there is such a contract in place. CEST then considers this contract, testing the employment status factors, and determines whether the engagement is more likely to be employed or self-employed for Income Tax and National Insurance contributions purposes. After receiving feedback during user testing, HMRC provided a link to guidance on MoO on CEST’s landing page to make this understanding clearer to users of the tool. The guidance can be found on GOV.UK: https://www.gov.uk/hmrc-internal-manuals/employment-status-manual/esm0543(opens in a new tab) .”
CIPP comment
The CIPP sits on the off-payroll working reforms forum and we would love to hear your views – do you think that MOO should be included in the CEST tool? Do you have any more general feedback that you would like to provide on your experiences of using the tool? Email the Policy team at Policy@cipp.org.uk. Thank you in advance.
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HMRC calculator issues resolved 6 May 2021
The CIPP recently reported that there were issues with a couple of the HMRC calculators that are available online to help employers with various payroll calculations. These problems have now been fixed.
The calculator for use when establishing National Insurance (NI) for company directors has been amended so that it now works correctly. The previous issue related to incorrect calculation of employer NI contributions where the total cumulative pay was higher than the Secondary Threshold of £8, 840 (ST) for tax year 2021-22, at which point employers start paying employer NI contributions, but lower than the Primary Threshold (PT) of £9,568 per year. This issue has now been rectified, and the calculator is producing the correct figures for employer NI. The Company Car and Car Fuel Benefit calculator has also been fixed. Previously, where the figure provided via an Optional Remuneration Arrangement (OpRA) was higher than the cash equivalent of the calculated car benefit, the tool was failing to replace the car benefit charge with the higher OpRA figure. This issue has now been resolved, and the calculator is producing the correct results.
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Updates to the CEST Tool landing page 7 May 2021
The changes made relate to the legislative changes to the off-payroll working rules, which were effective from 6 April 2021. HMRC has confirmed that the CEST tool itself has not been amended, and the underlying logic of the tool remains unchanged.
There is a link to HMRC’s CEST aggregate data, which provides details of the usage of the tool following the launch of the enhanced version, that was made available in November 2019.
The amendments to the landing page were made as a direct result of customer feedback, which suggested that further content needed to be added to streamline the user journey, and that there needed to be clearer signposts to existing guidance.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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