The Government has published revised rules reforming the current off-payroll rules. These already apply in the public sector but are being amended and extended from April 2021.
The impact of these changes should not be underestimated, and sufficient preparation will be crucial.
How will the proposed changes impact public sector organisations from 6 April 2021?
The current rules will apply with some key changes.
There will be a need to put in place additional processes and procedures to assess engagements and provide a statutory status determination statement to the worker and any third party, for example a recruitment agency, setting out the reasons for reaching that determination.
All parties in the labour supply chain will need to pass on and be aware of the organisation’s (end user’s) status decision and the reasons for that decision.
There is an explicit requirement to take ‘reasonable care’ in undertaking the status assessments. Failure to do so or failing to provide a statement, can result in being deemed the fee-payer, where they are not already, and thus the entity responsible becomes for PAYE/NIC withholding.
The end user of the services will be required to set up a status disagreement process and respond to representations made by off-payroll workers or the fee payer within 45 days of receipt. Failure to comply with the process in the required time enables transfer of debt provisions to apply.
What should organisations be doing now?
The deferral means that the current off-payroll working rules in the public sector, introduced in April 2017, will continue to operate as they do now. Public authorities will not need to implement the changes outlined above until April 2021. HMRC guidance on the current rules can be found here
Organisations should start to prepare for the proposed rules now and should not under estimate the amount of work required to be sufficiently prepared for the change.
As a starting point, we would suggest that organisations should:
- review the status determination process and consider what changes will be required to produce status determination statements and demonstrate reasonable care has been taken;
- assess how you will deal with the new processes and systems that will be required to manage status disputes within the required time;
- undertake due diligence on your worker supply chain. Transfer of debt provisions apply in the chain under the new legislation, transferring PAYE and NICs liabilities where there has been non-compliance in the chain;
- consider reviewing your current processes and procedures to make sure they are compliant with the existing rules, HMRC have started a campaign of reviews.
How can RSM help?
Our specialists have a detailed knowledge of the proposed rules and practical experience of implementing the changes that were introduced for the Public Sector from 6 April 2017.
We have a multi-disciplinary team of experts who can provide advice and help you prepare for all aspects of the proposed changes, including:
- designing new processes and controls, such as payroll, human resources, finance, data management and IT;
- workshops and bespoke training;
- developing a tailored approach to status determinations and employment status for your business; and
- changes to your budgeting, compliance, contracts and key stakeholder communications.