PAYROLL INSIGHT
you are subject to an HMRC inquiry. David Paul: Tax is certainly front of mind when drawing up contracts with many contracts now containing an increased level of hallmarks of self-employment. In these circumstances the use of ESS pre- engagement may give a distorted answer as it may not reflect what happens in reality once the engagement commences. Processes and procedures are being implemented, including communications to relevant stakeholders to advise them of the changes. These processes include assessing status in advance of the role commencing, communicating the assessment to the contractor and engaging department and reflecting in contractual terms whether the role is deemed to be inside the new rules. There is no shortage of third party businesses willing to help with this with some offering some creative solutions. Engagement via umbrellas is taken up by many, particularly where a contractor works for a number of clients which helps keep tax straight on an ongoing basis. Caution needs to be applied though; some of the options available may create other tax risk issues, such as managed service company risks, where a PAYE (pay as you earn) and NICs debt can be transferred elsewhere in the supply chain. Public sector entities therefore need to ensure that appropriate due diligence is undertaken when outsourcing this to other parties so that the offering, and any tax and reputational risk is fully understood. Karen Beckett: We sent out communication to both the individuals affected under the new rules as well as to the manager that had appointed them to carry out the work, in order to advise them initially of the new rules coming into to force from April and that we had identified them as being affected. Some have subsequently moved onto new contracts whilst others have accepted they will have tax and NICs deducted from their payments. We have set up new processes to accommodate those who will have tax and NICs deducted from their invoices and for us to report to HMRC via RTI. Duncan Groves: We have advocated an approach involving both an updated/ revised guidance on employment status and subsequent training. We have recommended that clients invite to the training personnel from procurement, finance, creditors, payroll and HR, and
Neil Tonks, legislation team at MHR
David Paul, executive director People Advisory Services, Ernst & Young LLP
has been a very challenging message to get out in the workforce as most times the perception is that it always applies to a provider whatever they are doing. We certainly have some engagements where the legislation may apply to some of the work carried out but will definitely not apply where we are procuring goods from them. When we consider across our business how many different individuals may instigate a new supplier relationship there is a huge education piece of work required. Ian Holloway: As a service provider, we will not be aware of this. However, we have advised clients that they should have procedures and processes in place. Jas Jhooty: We offer an accurate free online IR35 testing service that can be accessed at https://emtax.ir35testing. co.uk/TakeTheTest. Our test has been fine- tuned to ensure continued accuracy over several years, asks 101 questions, and provides the same results as each of the 21 historical IR35 court cases. Results of our test are either a pass, borderline pass, borderline fail or fail. For all outcomes other than an outright pass, we can provide advice on how to change your contracts and/or procedures which if followed will result in a strong pass the next time the test is taken. If required a 30+ page test report, pass certificate and independent sign-off sheet can be purchased that can all be used as effective evidence should you find that
also, importantly, budget holders from across the organisation. n
The final pages of this roundtable, which comprises the participants’ responses to further questions, will appear in the next issue. How are you/your clients excluding the identified individuals from being treated as ‘employees’ or ‘workers’ for purposes of employment rights? Is it necessary for payroll and HR software to differentiate between the various types of worker? How are service suppliers reacting to the changes? Do you expect to see an increase in the rate charged for the work? Do budgets from April fully reflect increased costs (e.g. employer NICs, holiday pay, increased rate for the work)? Are you/your clients content to continue accepting and using invoices or is there likely to be a move to timesheets going forward? Are you/your clients required to identify and specify the earnings period for Class 1 NICs when entering a payment? Do you envisage any different problems if these new intermediaries rules were extended to the private sector? What sort of lead time might be appropriate? And do you think government is giving sufficient time for implementing new regimes and ensuring that all areas of tax administration are consulted with before timetables are set? Do you think there is a significant transformation occurring in the way government and society perceive self-employment? If there is such a transformation underway, do you foresee a time when everyone who uses the services of another (e.g. monthly window cleaner) becomes an employer?
| Professional in Payroll, Pensions and Reward | June 2017 | Issue 31 22
Made with FlippingBook - professional solution for displaying marketing and sales documents online