1 June 2018
On 18 May 2018 HMRC launched a consultation about off-payroll working in the private sector.
This follows on from the introduction of new rules regarding off-payroll working in the public sector in April 2017 (which I’ve previously blogged about here). The consultation period lasts until 10 August 2018 and, for those who like to do things at the last minute, the deadline is at 11.45 pm!
The consultation document runs to 32 pages and is accompanied by a brief Treasury press release, a factsheet of 2 pages, and a research document into the impact of off-payroll reform in the public sector, which is 58 pages long. HMRC recommend that all the documents are read before any response is given to the consultation, so there may be some holiday reading for anyone wanting to participate.
Most commentators, contractors and professional bodies have not yet had the chance to take in all of the details. Initial reactions have ranged from descriptions of the consultation as dreaded, or long-awaited, via a call to arms from IPSE, the PCG’s successor, and rather more measured responses from the likes of APSCo and the ICAEW.
The consultation lays out a number of options and includes a discussion of matters such as enhanced compliance checking and record keeping, as well as an extension to the private sector of the rules currently in force in the public sector, which seems to be HMRC’s preference. In addition to the consideration of policy options, the consultation poses 34 questions broken down into the following subject headings:
- The compliance challenge
- Extending the public sector rules to the private sector
- Encouraging or requiring businesses to secure their labour supply chains
- Additional record keeping
- Other options to consider
- Other issues
The vast majority of the questions cover the second to fourth areas on the above list and these areas will attract most attention.
The press release is headed, 'Government to consult on tax avoidance in the private sector', which seems to give a greater scope to the consultation than is actually the case. The sub-title – (the) 'Consultation looks at improving the rules around 'off-payroll' working so contractors who work through their own company pay the right tax' – has a more precise and positive feel. Certainly there are few who would disagree that the rules around off-payroll working need improving and we all want the right amount of tax to be paid.
About half of the factsheet is a precis of the research document, seeking to debunk popular myths surrounding the introduction of off-payroll working in the public sector. Whether the facts on the factsheet are all facts is, perhaps, questionable and included are statements such as, ‘HMRC estimate that currently only around 10% of people, who should comply with the off-payroll working rules, do so, ‘ and ’ The cost of non-compliance in the private sector is growing and will reach £1.2 billion a year by 2022/23.’ Perhaps these should be candidates for the BBC’s ‘More or Less’ programme. However, given the BBC’s record regarding off-payroll working, it may be too hot a topic!
We’re only in the foothills of this consultation and there will be many more opinions to be expressed on this subject. Pending completion of the consultation, HMRC’s response and the eventual new laws that will arise, if you have any concerns about off-payroll working in the private, or, indeed, the public, sector, please don't hesitate to contact me or fill out our contact form here.