ATT calls for clarity on off-payroll changes

ATT, the Association of Taxation Technicians, is calling for clarification from HMRC after the release of its guidance document focusing on off-payroll rule changes.

Starting from April 2020, off-payroll rules applied to contractors engaged with the public sector will be drawn-out to the private sector. This change will generate a shift in responsibility, in which determining whether engagement falls within off-payroll rules will go from the worker’s personal service company (PSC) to the engager.

When rules apply, responsibility for applying tax and national insurance contributions lies within the engager or agency which pays the worker’s PSC.

In the wake of the draft legislation for Finance Bill 2019/20 published in July, ATT highlighted a lack of clarity and guidance from HMRC, in which details are absent.

Michael Steed, co-chair of ATT’s Technical Steering Group, said: “Uncertainty in how the off-payroll rules will operate in practice is making it difficult for businesses to make adequate preparations. We encourage HMRC to release more information and detailed guidance as soon as possible.”

ATT believes the lack of detail in HMRC’s guide underlines a concern as to when an agency or engager can be held liable for unpaid contributions because another party in the labour supply chain has failed in their obligations under these rules.

For example, if three agencies are involved but one fails to comply, the two others will also be held accountable for unpaid taxes even though they would have followed all their obligations. For this reason, details are important to the risk analysis and preparations of businesses affected by the off-payroll rules.

Steed concluded: “These changes come in from next April which means that businesses now have only about six months to get ready – and this at a time when many may also be preparing for or responding to the implications of Brexit.”

There remains much work to be done to ensure that private sector engagers and agencies are both aware of the changes and ready for them. The current lack of clarity on some key areas makes it difficult for businesses to prepare properly. More information and detailed guidance from HMRC are urgently needed if the roll out of these new rules will succeed.”

In response, banks such as Barclays told their contractors individuals will be forced out by the end of February 2020 unless they go onto PAYE.

Dave Chaplin, CEO of Contractor Calculator, commented: “This isn’t a blanket assessment, as some might claim. It’s simply that, under the new Off-Payroll legislation, Barclays is not prepared to take any risks come April 2020 when the reforms hit the private sector. Instead, the bank is choosing (by inference) to pay more for its contractors.

“This move is a direct consequence of very bad legislation. It’s absurd to suggest that 100% of the contractors working on critical Barclays projects are caught within IR35.  The Treasury and HMRC have repeatedly said that these reforms should not affect the genuinely self-employed. This demonstrates the untruthfulness of that claim,” he added.