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Government releases consultation on off-payroll working in the private sector

The government has released its consultation on off-payroll working in the private sector.


The government has estimated that only 10% of individuals working in this way apply the rules properly, costing the Exchequer hundreds of millions of pounds in lost tax revenues every year.


In April 2017, the government reformed these rules for engagements in the public sector, and early indications are that this has resulted in an increase in public sector compliance.


In the Autumn Budget 2017, the government announced it would consult on how to tackle non-compliance with the off-payroll working rules in the private sector, and we are asking for comments on the best way to do this.


REC director of policy, Tom Hadley, said, “We support the government’s efforts to improve compliance and ensure everyone pays the right amount of tax but are concerned that the government wants to proceed with reforms which would cause significant upheaval to private sector employers and recruiters. This consultation is a good opportunity to rectify issues such as those with the CEST tool which have been flagged by recruiters.


“We are pleased to see the government acknowledge that the public sector needed more time to prepare and adapt to the public sector changes. The government needs to learn from this and ensure that there is sufficient time for the implementation of any reforms, introducing changes in April 2019 would be premature. We do not want to see a repeat of the public sector chaos. We look forward to gathering members views and representing our industry on this issue over the coming months.”



Samantha Hurley, director of operations at the Association of Professional Staffing Companies (APSCo), commented, “We have now fully briefed our members on the consultation. Although we welcome the opportunity for all stakeholders to consult, we at APSCo feel that the consultation has been written in a fairly leading way and, in our opinion, the manner in which this has been presented gives little alternative to the Government’s preferred option to extend the off-payroll rules to the private sector.


“Our own research undertaken with our members - which HMRC has largely labelled as anecdotal - does not reflect the findings of the research undertaken with public bodies. 


“The consultation document and accompanying collateral also gloss over any negative feedback by burying it below the headline findings. For example, almost a third (28%) of central bodies surveyed for HMRC’s research reported that the reforms had led to them increasing the gross hourly rates paid to off-payroll contractors. However, it was not recorded how significant these rises were, and this was not highlighted in HMRC’s easily digestible factsheet. 


“Like our members, we believe that extending these rules to the private sector will have an adverse impact on the strength of the UK’s labour market and wider economy and we will be working closely with our members and liaising with HMRC and other IR35 Forum members on our response to this consultation.”


Crawford Temple, CEO of PRISM, commented, "This is staggeringly disappointing as it shows that HMRC and the Government are not listening to the views of the leading business and accountancy groups in the UK. HMRC and HM Treasury, as well as BEIS and OTS, were at our round table discussion and strong feelings were spelt out very robustly. HMRC have clearly manipulated the facts in their consultation document to support their case. This is too important an issue to play games and it needs considerable time and careful reasoned thought to deliver a long-term answer as after all there are over 5m people’s lives and livelihoods that are being affected."


Picture courtesy of Pixabay

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