The latest review of IR35 is due to conclude soon, so what should you be doing to ensure you are ready for the changes?
One thing you should do, is attend a free London breakfast seminar, hosted by Reward Strategy and Crowe UK, on February 26.
The session will discuss what the changes mean for you, how to identify key stakeholders and off-payroll workers and how to plan for change.
Caroline Harwood, partner and head of share plans and employment tax, at Crowe UK will be presenting the seminar with Amber-Ainsley Pritchard, editor of Reward Strategy, chairing the event.
To find out more about the seminar, email Jamie Thomas at: firstname.lastname@example.org
In the meantime, follow Harwood’s advice to prepare for the reformed off-payroll working rules which come into effect from April 2020:
The new rules will move responsibility for determining whether PAYE/NICs should apply from the personal services company (PSC) to the engager (the client) and for deducting the correct amounts to the party paying the PSC (the fee payer).
Check if you are within the scope of the new rules: They apply to all public sector bodies and medium/large organisations in the private sector.
Check who is engaging off-payroll workers: Consider HR, finance or procurement.
Map off-payroll workers and determine all parties in the labour supply chain: Include agencies or other parties as well as the worker and PSC.
Check whether intermediaries are caught by IR35: Include companies where the worker broadly has a five percent interest; partnerships where the worker is a 60 percent partner or you are the only client; or some individuals; and where the worker receives a payment which should be treated as employment income. If the intermediary is not caught, then the engagement is outside IR35.
Check if you’re the client and/or fee payer.
The client must assess employment status of the worker: Use the HMRC tool ‘CEST’ as the first test. If you answer the questions completely and correctly, HMRC should stand by the output. However, CEST has its own inadequacies. If it gives an indeterminate answer or one you disagree with, seek specialist advice. Determining employment status for tax is not easy as there is no statutory test, it differs from employment law and the indicators of employment are determined by case law. This has led to different tests being afforded different ‘weight’ and in recent cases, the importance of certain tests disregarded by HMRC have been highlighted.
The client must issue a Status Determination Statement: This must be to all parties in the labour supply chain.
The worker can disagree: If they do, you have 45 days to respond. There is no further appeal and HMRC will not get involved. You should ensure you have a dispute resolution policy.
From April 2020:
The fee payer must determine the Deemed Direct Payment (DDP) on which PAYE and NICs will be operated: The DDP is net of certain deductible expenses and costs of materials, so you will need a process to capture this data.
The PSC can pay the worker: This can be done via their payroll without deduction of further tax or they can receive payment in the form of dividends. They get no additional employment rights.
To find out more about the seminar, in London on February 26, email Jamie Thomas at: email@example.com