PAYROLL INSIGHT
Workers’ services provided to public sector through intermediaries
In April, Professional in Payroll, Pensions and Reward invited several industry luminaries to participate in a virtual roundtable on the highly topical issue of the off-payroll working changes that came into effect from 6 April 2017. These changes, which have retrospective effect by virtue of provisions in the Finance Act 2017, require employers in the public sector to place on their payroll many individuals who previously had been treated as outwith liability to PAYE (pay as you earn) and Class 1 National insurance contributions (NICs).
Participants Karen Beckett BA (Hons) FCIPP, head of payroll and benefits, Dorset Healthcare University Duncan Groves, director and head of employment taxes, PSTAX Helen Hargreaves MSc FCIPPdip, associate director of policy & membership, CIPP Ian Hodson MCIPPdip, head of reward, University of Lincoln Ian Holloway MSc FCIPP, head of legislation and compliance, Cintra HR & Payroll Services Ltd Jas Jhooty, director, emTax Ltd David Paul, executive director People Advisory Services, Ernst & Young LLP Neil Tonks, legislation team at MHR What difficulties have occurred or you expect to occur in identifying which ‘suppliers’ (i.e. companies/individuals) are affected by the changes from this date? How easy has it been for you/your clients to identify accurately all those individuals
who fall within the scope of the changes? Karen Beckett: We identified at an early stage the need to review what payments were being made via our payments department. The volume of payments made via invoices made this a task that we needed to start early, even at a stage when we were waiting for full clarification from HM Revenue & Customs (HMRC); in fact, we started this whilst HMRC still had consultation documents published. Whilst the task of identifying those affected by the new off-payroll working rules has taken time, it is one that we felt was essential and which needed time and resources dedicated to the process to ensure we met compliance. Duncan Groves: Many clients have found identification of potentially ‘in scope’ cases difficult. The main issue is that payroll have no knowledge of the entities being engaged with; those working on creditors have some knowledge of the invoicing but no knowledge of the relationships; and the budget holders who know the relationships have very little awareness
of the changes to the law and what they mean organisationally. Through a combination of procurement, creditors and HR (human resources), it is possible generally to get to 90% of the problem but the ‘hidden’ 10% remains a concern. Helen Hargreaves: Although we have always known that the ‘real world’ is very different from the utopia that HMRC present in any new guidance, this new legislation seems to have caused even more problems than usual for employers struggling to understand just who may be affected. The CIPP’s Advisory Service has received many queries from payroll agents and public sector bodies trying to understand how the legislation will affect clients and contractors. Of particular concern are those working
Karen Beckett BA (Hons) FCIPP, head of payroll and benefits, Dorset Healthcare
| Professional in Payroll, Pensions and Reward | June 2017 | Issue 31 18
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