A consensus is emerging among the tax profession for the government to delay any plans to extend its recent reform of public sector off-payroll working rules to the private sector until April 2020 at the earliest.
Following the HM Treasury and HMRC consultation, which ended on 10 August, the CIOT agrees in its response that the level of non-compliance with the rules means that the government needs to take action. However, the CIOT argues that this does not necessarily mean that extending the public sector rules to the private sector is the best approach. The Institute suggests alternative measures, such as enhanced record keeping, filing regular reports of payments to personal service companies (PSCs), increased penalties for non-compliance and making the worker jointly liable for PSC debts of PAYE and NICs.
The Institute argues that the public sector changes, introduced in April 2017, should be allowed to complete a full compliance cycle (to 31 January 2019) before HMRC can judge whether they have been successful and extend them.
Colin Ben-Nathan, partner at KPMG, believes a full post-implementation review of the public sector reforms is required, which should take account of the government’s wider consultation on employment status in response to the Taylor review. Any major change to private sector IR35 rules should be delayed until April 2020 at the earliest.
Chris Thomas, an employment tax expert at Pinsent Masons, is concerned about the effects on the infrastructure and energy sectors in particular and believes ‘2020 should be the earliest date contemplated’ for any changes.
Another factor uniting commentators is doubt about the accuracy of the ‘Check employment status for tax’ (CEST) tool, on which HMRC places increasing reliance, while admitting the tool gives a clear answer only 85% of the time.
A consensus is emerging among the tax profession for the government to delay any plans to extend its recent reform of public sector off-payroll working rules to the private sector until April 2020 at the earliest.
Following the HM Treasury and HMRC consultation, which ended on 10 August, the CIOT agrees in its response that the level of non-compliance with the rules means that the government needs to take action. However, the CIOT argues that this does not necessarily mean that extending the public sector rules to the private sector is the best approach. The Institute suggests alternative measures, such as enhanced record keeping, filing regular reports of payments to personal service companies (PSCs), increased penalties for non-compliance and making the worker jointly liable for PSC debts of PAYE and NICs.
The Institute argues that the public sector changes, introduced in April 2017, should be allowed to complete a full compliance cycle (to 31 January 2019) before HMRC can judge whether they have been successful and extend them.
Colin Ben-Nathan, partner at KPMG, believes a full post-implementation review of the public sector reforms is required, which should take account of the government’s wider consultation on employment status in response to the Taylor review. Any major change to private sector IR35 rules should be delayed until April 2020 at the earliest.
Chris Thomas, an employment tax expert at Pinsent Masons, is concerned about the effects on the infrastructure and energy sectors in particular and believes ‘2020 should be the earliest date contemplated’ for any changes.
Another factor uniting commentators is doubt about the accuracy of the ‘Check employment status for tax’ (CEST) tool, on which HMRC places increasing reliance, while admitting the tool gives a clear answer only 85% of the time.
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