In a response to the House of Lords sub committee, the U.K. government are continuing with plans to progress the introduction of off-payroll working rules in the private sector which, as a result of #COVID19, was delayed from April 2020 until April 2021.
They claim that the “off-payroll working rules are designed to ensure that people working like employees but through their own companies, and their engagers, pay broadly the same income tax and national insurance contributions as people who are directly employed”.
The response states that “reforming the rules and transferring the responsibility for determining whether they apply from individual contractors to the firms that engage them will be a step towards greater fairness in the tax system …. it is not right that the use of a limited company structure should result in the paying of significantly less tax than a direct employee doing the same job”.
The Government is clear that end-clients must take reasonable care when making status determinations for off-payroll working and making blanket determinations is not compliant with the rules.
They agree agree… “that organisations need help to prepare for the changes introduced by this reform. This is why HMRC created a dedicated team to provide education and support for businesses and individuals”.
But disagrees with the Sub-Committee’s view that the CEST tool is not fit for purpose…. HMRC have made significant enhancements to CEST since it was first introduced in 2017. The current CEST tool was rigorously tested against employment status case law. Details of this technical testing were published by HMRC on 17 March 2020….