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The Readiness of Businesses and Contractors for the Implementation of the New Off Payroll Working Rules from April 2020

Saffery Champness were recently present at a meeting with HMT and HMRC, and other large accountancy forms (eight in total), to discuss the readiness of businesses and contractors for the implementation of the new off payroll working rules from April 2020.

The key points that came out of the meeting were:

  • Review is not to change any of the currently drafted policy/legislation but rather to assess the readiness and see if guidance and communications can be improved.
  • There will be no further updates to the CEST logic, only additional wording on questions asked perhaps.
  • They could not rule out a delayed implementation, if the output of the review was that businesses, etc. were not ready, but their preferred route is a soft implementation and enforcement initially.

More guidance was needed in the following areas:

  • Change to 6 April 2020 onwards for all services performed rather than payments made, as current rules are catching services performed in March 2020, putting additional pressure on all to be ready earlier.
  • Confirm exactly when a Status Determination Statement (SDS) has to be issued – just when inside IR35? Or for all results?.
  • Whether it is appropriate for an agency/fee payer to make an SDS on behalf of their client.
  • Encourage small engagers in the private sector to communicate the fact to workers that they are outside the new rules and therefore that the IR35 obligations still sit with the worker (also pass this to feepayer/agency).
  • Groups and the small company exemption – publish further guidance promised/anti avoidance, etc.
  • Deemed employer rules for international engagers – how does this apply currently and how do they propose to communicate with this population.
  • Transfer of debt examples are needed for supply chains.
  • Set out a timeline/deadline for an appeal from the worker; currently this is open; the only deadline is for the engager to respond to an appeal within 45 days.
  • Give examples of what is reasonable care by an engager.
  • Consider soft initial implementation and enforcement from HMRC for the new rules.
  • Confirm and communicate how a post HMRC review will work, will HMRC use CEST themselves, etc? and
  • What to do when an ‘unknown’ result is given by CEST - can HMRC provide a resolution service? Common output from a CEST assessment with no further guidance apart from seeking independent tax advice.  Businesses and workers need more help than this.

Neil Davies - Partner

For and on behalf of Saffery Champness LLP

+44 (0)117 915 1617