HMRC reviews introduction of April’s new tax rules

CEST, HMRC, off-payroll, PSC, taxation

The government has launched a review into the introduction of changes to ‘off-payroll’ working rules which are to start in April 2020. There is no indication of a delay, rather the aim is to ensure ‘smooth implementation’ of the reforms.

Often contractors supply their services to a client through a personal service company (PSC). It is currently the role of the PSC to determine whether the individual is an employee or not. From April, however, clients will have that responsibility.

Sub-contracted specialists play a significant role in the construction industry, so this change in approach could have a big impact on the administration burden of large contractors. Auditing of freelance workers has begun in many organisations, but many specialists are still uncertain if they are going to be recategorised as ‘employees’.

The review is intended to address concerns from businesses and individuals who might be affected and to identify whether additional support is needed. Government is also looking into its Check employment status for tax (CEST) tool to ensure it is fit for purpose.

The off-payroll working rules were introduced in 2000 to ensure that someone working like an employee, but through a company, pays similar taxes and National Insurance contributions (NICs) to other employees. An updated was introduced throughout the public sector in 2017 and April’s reforms will take in the private sector.

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