PAYROLL INSIGHT
the ESS responses? What is your view of the ESS and its accuracy/reliability? Duncan Groves: Yes, we are using it and advising clients to use it (and keeping an audit trail, including the ESS question responses). It would be crazy to go with a different ‘tool’ – even one that purports to be more accurate – since HMRC undertakes to accept only the outcome of the ESS. We believe that the tool has improved significantly through the past two months (since the ‘testing’ phase) and provides a sensible determination method for a high percentage of cases. There are, however, cases where the outcome is questionable in law. We think this is inevitable since the tool only takes account of the individual responses and can’t ‘stand back’ and survey the overall picture. Since this problem can’t easily be resolved, I support the concept that the tool works for most, but not all, cases and is therefore positive for public bodies (and all employers in the context of employment status generally). Helen Hargreaves: We have heard from those who have used the ESS that it is relatively straightforward to use, with the added reassurance that if employers use the service and input accurate information, keeping a copy of the results, then HMRC will abide by the outcome. However, with several areas of the public sector being severely impacted by this change in legislation, it is perhaps not surprising that we are now hearing anecdotal evidence that some of the largest organisations have decided not to use HMRC’s tool for checking an individual’s employment status for tax and are instead deciding that it is easier and safer to simply consider these individuals as workers and deduct income tax and Class 1 NICs (National Insurance contributions) through the payroll. This is a worrying development for those who it should not be considered a worker as they currently have no right of appeal if the organisation makes this determination incorrectly. This situation appears to have surprised HMRC who must now provide a resolution to this situation. Ian Hodson: Like many in our sector – and as with the ESI tool in respect of self-employment – there is a natural response to use the tools provided by HMRC to ensure compliance. We have been supporting this with building up our
own knowledge levels with development sessions for HR and finance colleagues and primarily these have been built around ensuring that we can answer the questions that are being put to us by colleagues. The ESS tool will form our determining tool particularly whilst we are in the early days of embedding the changes to our processes. I am sure over time we will develop our own internal guidance but this will always be based on and guided by HMRC. Our internal process will be to keep copies of all ESS outcomes to allow us to revisit them if needed and also for the purposes of audit where we like to have the reassurance of following protocol correctly. My fear is that it is almost impossible to make a tool that is going to correctly determine the status of all the relationships we have at the University and I always become nervous that individuals will find ways of manipulating responses to meet the outcomes they want. As with any tool nowadays individuals quickly work out the ‘killer’ questions that send the decision one way or another. Having used the tool, I am also a little nervous that there are many response sets that result in an undetermined outcome. From a payroll perspective I would be a lot more comfortable if I felt that the tool was going to determine an outcome for the majority of cases as no outcome really does not help us apply ourselves consistently. Ian Holloway: Clients have been made aware of all the HMRC guidance that exists, including the ESS tool. It was disappointing that the guidance on Gov. UK published on 1 March was different depending on whether you were looking at the ‘technical note’ or the ‘information for agents’. This has now changed; however, I worry that many employers will have seen the original guidance and have either printed it or saved it electronically. Therefore, they may be working from the original guidance (incorrect) rather than the new and updated guidance. I have heard reports of inaccuracy with
Ian Hodson MCIPPdip, head of reward, University of Lincoln
and identify each contractor. This can be very labour intensive, especially where they are engaging with a large number of PSCs (personal service companies), all of which are providing different services in different areas of the organisation. Additionally, those responsible for making the decisions are often remote from the engagement and may not have sufficient insight into the engagement to determine whether or not it is caught. Particular difficulties have arisen where private sector organisations supply outsourced services and/or staff to a public sector organisation, where it is deemed that they are providing labour, i.e. individuals rather than managed or composite service. Distinguishing between these types of arrangements can be difficult in practice and result in some private sector organisations, perhaps inadvertently, being caught up in the new rules. Overall, managing the changes is very time-consuming and needs a lot of resource. Are you/your clients using HMRC’s employment status service (ESS) to decide if a person is within scope? Are they keeping full details of
Ian Holloway MSc FCIPP, head of legislation and compliance, Cintra
HR & Payroll Services Ltd
| Professional in Payroll, Pensions and Reward | June 2017 | Issue 31 20
Made with FlippingBook - professional solution for displaying marketing and sales documents online