RTI reporting
The worker’s intermediary should ensure that an FPS is submitted normally, on or before payday.
The FPS will advise HMRC that the gross statutory payments have been made. Even though the figures received by the worker will have been net amounts, this will provide HMRC with the data it requires to apply the usual checks to any statutory payments made.
In line with standard process, an Employer Payment Summary (EPS) also needs to be sent to advise HMRC of the amounts of statutory payments that the worker’s intermediary will reclaim.
*Please note that if a worker pays themselves by dividends only, then no entitlement to statutory payments arises. ** Please note that if a worker received net amounts from their intermediary that were not subject to Class 1 NICs when paid by the deemed employer, then these amounts would need to be discarded
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Stance on Mutuality of Obligation remains unchanged 30 April 2021
Peter Aldous MP submitted a question for the Chancellor of the Exchequer, which queried whether or not HMRC had changed its stance on updating the Check Employment Status for Tax (CEST) tool to include consideration of Mutuality of Obligation (MOO).
Financial Secretary to the Treasury, Jesse Norman, responded:
“‘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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Off-payroll working – working through an umbrella company guidance 4 May 2021
With off-payroll working rules coming into effect from 6 April 2021, many Personal Service Companies (PSCs) have sought the services of umbrella companies. HMRC has recognised that there is some confusion over how a contractor would be paid when using this service, therefore have produced additional guidance on this specific area.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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