IR35: House of Lords calls for a re-think
The House of Lords report concerning the extension of the off-payroll working arrangements into the private sector was published on 27 April 2020.
The report Off-Payroll working: treating people fairly obtained evidence from many representative organisations and identified numerous issues which the Government needs to reconsider ahead of 6 April 2021. The following are a few of the key points identified in the report:
- Medium and large businesses will be made responsible for enforcing a regime which HM Revenue & Customs has struggled with over the last 20 years
- The Check Employment Status for Tax (CEST) tool does not:
- Fully reflect case law
- Fully consider mutuality of obligation
- Fully explore the right of substitution
- Consideration needs to be given as to how the wide range of private sector businesses will be expected to operate the legislation
- Concerns were raised regarding lower paid workers being forced to provide their services via umbrella company arrangements. There was a noticeable increase in the use of such arrangements within the Public Sector which saw an extension to its compliance obligations from 6 April 2017
It is expected the proposals will raise £4.1bn by 2024/25 assuming they are implemented from 6 April 2021, however the Government will need to consider whether all the lessons learned from the changes made within the Public Sector have been considered and also address many of the concerns identified in the House of Lords Report.
We expect further announcements from the Government later this year.
If you have any questions regarding your off-payroll working arrangements, please contact Nick Bustin, Director of Employment Tax, or your usual haysmacintyre contact.