The agent update 115 has reminded that at the Autumn Statement on 22nd November 2023, the government is introducing a change in policy that may affect organisations with an open compliance check as part of the reformed off-payroll working rules (IR35).
Summary of the change
Currently, when HMRC find that a client has made a mistake in applying the off-payroll working rules, they assess how much the deemed employer owes in Income Tax and National Insurance contributions.
From 6th April 2024, HMRC are be able to take into account, or ‘set-off’, the taxes the worker or their intermediary have already paid against the amount the deemed employer owes.
The policy applies to Income Tax and National Insurance contributions they assess on or after 6th April 2024, from off-payroll working errors in payments since 6th April 2017.
What this could mean
Organisations may be able to pause the settlement of their open off-payroll working compliance check until after 6th April 2024.
HMRC would only consider a pause if:
- the compliance check has reached settlement, and:
- the organisation has acknowledged an error in applying the off-payroll working rules
- the deemed employer’s gross liability, including any penalty, has been agreed
- the organisation gives the HMRC information they need to work out a set-off, which is:
- the name of the Personal Service Company and Company Registration Number
- the worker’s full name or National Insurance number
What next
For organisations with open off-payroll working compliance checks, HMRC will carry on with their compliance check as normal.
If an organisation meets the conditions when HMRC are ready to agree a settlement, they will ask the organisation if they want to pause. If HMRC agree to pause, they will contact organisations again after 6th April 2024 to settle the compliance check.
Organisations do not have to pause their settlement if they do not want to. If organisations choose to pause, HMRC advise organisations to make a payment on account for the full amount, to stop statutory interest building up.
Further information is available on the related consultation outcome on off-payroll working: calculation of PAYE liability in cases of non-compliance.
PAYadvice.UK 21/12/2023