Treasury Guidelines On Off Payroll Arrangements APSCo Reports On Positive Meeting With HMRC & Trea
Treasury Guidelines On Off Payroll Arrangements – APSCo Reports On Positive Meeting With HMRC & Treasury
At a recent meeting with representatives from both HMRC and the Treasury, The Association of Professional Staffing Companies ( APSCo) expressed its concern about the effect these guidelines will have on the stability of the public sector supply chain. As a result of this meeting, The Treasury has expressed an interest in APSCo providing feedback from members working in the public sector regarding any unintended consequences of the guidelines.
“We are particularly concerned by the use of HMRC’s & lsquo;Business Entity Tests’ as the method by which limited company contractors can prove that they are paying the correct level of tax, as these are disproportionately weighted against personal service companies”, said Samantha Hurley, APSCo’s Head of External Affairs.
The guideline’s new contractual terms for the public sector will in some cases give the hiring client the right to pass onto HMRC all information provided by contractors in situations where they do not feel that they have received adequate proof that the appropriate amount of tax will be paid. APSCo voiced its unease about the ability of public sector hiring managers to make what can be a very complicated determination with regard to the tax status of off-payroll contractors – a situation which could potentially see a huge amount of information flowing into HMRC.
However, at the meeting, HMRC made it clear that it will be the responsibility of departments to assure that tax obligations are being met. “HMRC have assured us that the guidelines are definitely not a sampling exercise,” said Samantha Hurley. “Additionally, The Treasury made the point that while the guidelines require that all departments include contractual terms within their agreements that give them the right to seek assurance – they are not necessarily expecting hiring managers to do so in every single off payroll situation.”
“While we are encouraged by the fact that there is a clear understanding within HMRC and The Treasury that not all off payroll arrangements amount to tax avoidance – and that there are legitimate situations where a PSC is a correct supply chain model, the findings of the recent Public Accounts Committee report show that some misconceptions remain, particularly in the political arena” added Hurley. “Consequently we will be meeting with the Chair of the Public Accounts Committee, Margaret Hodge, later this month. We are also very encouraged by the fact that The Treasury has asked us to collect feedback from our members regarding the guidelines – clear evidence that we are a Trade Association of real significance and standing in the professional recruitment sector.”