The Association of Taxation Technicians (ATT) is calling for the changes in the way businesses employ the services of contractors, to be delayed by 12 months.
The ATT says that the cancellation of the UK Budget should lead to the 2020 changes being postponed because the longer the delay to the Budget and Finance Bill, the longer businesses will have to wait for the final legislation which will introduce these controversial changes to the off-payroll rules – leaving businesses with a greatly reduced and unrealistically short time frame in which to adapt to the changes.
This makes it near impossible for businesses to make adequate preparations. Under the current timetable there remains only a little over five months for businesses to get ready and this at a time when many will be preparing for or responding to the implications of Brexit.
If the rules are implemented as proposed in the draft legislation then, from 6th April 2020, responsibility for determining whether an engagement falls within the off-payroll rules will move from the worker’s personal service company (PSC) to the client (the business which requires the worker’s services). The party which pays the PSC (which may be the client, or an agency depending on the commercial arrangements) will then be required to operate PAYE and NICs as appropriate.
The lack of final legislation and detailed guidance combined with the current absence of an updated version of HMRC’s much maligned Check Employment Status for Tax (CEST) means that there is a real lack of clarity as to how the off-payroll rules will operate in practice in the private sector.
Jon Stride, Co-chair of ATT’s Technical Steering Group, said, “We strongly urge the Government to delay this major shift in how businesses engage with contractors until 2021.
“Many important practical issues, such as when liability can be transferred within an engagement supply chain and exactly what information will need to be shared by clients, are not addressed in the draft legislation at all. We have also seen only limited evidence of any HMRC education and information campaigns so far.
“Without a delay, we anticipate low levels of compliance and increased numbers of errors, and greater demand on HMRC telephone lines and HMRC staff for support at a time when their resources are already strained. We may also see risk-averse positions being taken by businesses, for example, a blanket decision to put all workers onto the payroll regardless of the nature of the arrangements, to the detriment of workers.”
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