IPA on proposed reform to Off-payroll working rules

The IPA has responded to the Government’s current consultation

The IPA has submitted a response to the Government’s current consultation in relation to the private sector reform of Off-payroll working rules, known as IR35. Changes to the responsibilities in determining employment status for tax are expected to come into force from April 2020.

As for the public sector in 2017, the reforms are being proposed with a view to ensuring that individuals who work like employees pay broadly the same employment taxes as employees, regardless of the structure they work through.

On a general point, the IPA welcomes the Government’s decision that the smallest organisations won’t be affected by the proposed reforms. It also welcomes the idea of using an existing definition of ‘small company’ for these purposes.

On more specific points of the consultation, the IPA suggests a number of improvements to HMRC’s tool for checking employment status for tax (CEST). These include:

  • Providing a road map for the entire flow-diagram / decision-tree powering the CEST tool.
  • Providing, whether by way of footnote or otherwise, pointers toward relevant case law that has driven the writing of each question in the tool.
  • Expanding on the rationale for the outcome which would help to mitigate the burden on private sector clients under the proposed reform.

Says IPA Finance Director, David Clasen:

“Since freelancers are often used by member agencies, this is an important yet complicated topic.

“Member agencies should, as soon as practicable and at the latest before 6th April 2020, identify and review their current engagements and ensure they have processes in place for making determinations of the employment status for tax purposes of the people they engage via intermediaries.”

View the full consultation document.

Last updated 21 January 2022