Off-payroll working in the private sector

Published on 29 May 2019

In the consultation document it is confirmed that planned extension of the off-payroll working rules to the private sector from April 2020 will not apply to small businesses in the private sector that engage with off-payroll workers. In our response we welcome this, however go on to say that is not clear to us that by framing the small business exemption in the way proposed, whether business-to-consumer arrangements will fall outside the scope of the changes, for instance, where a carer provides services to a disabled individual/private householder via a personal service company (PSC).

Carer and elderly man
©istock/Dean Mitchell

We also take the opportunity to welcome HMRC’s confirmation that they will not run any targeted campaigns looking at past IR35 compliance. However it has come to our attention that following HMRC’s success in the Christianuyi case, they might be considering investigating previous arrangements under the Managed Service Company (MSC) legislation instead. We say we would welcome the opportunity to discuss this with HMRC further.

The rest of our response is largely focussed on the fact that our concerns about what will happen to workers who are only in PSCs at the behest of their engagers, have not been addressed. For example, with the tax advantage for their engager gone, it is likely that many workers will be pulled out of PSCs and put into PAYE umbrella arrangements. However, there are many non-compliant models out there, for example the elective deductions model and the mini umbrella company model.

Furthermore, depending on whether the ltd is closed down correctly, this could leave the worker with messy ltd compliance issues that they do not understand. In our response, we urge HMRC work with Companies House to come up with a way of making it as easy as possible for taxpayers to close down PSC, perhaps in conjunction with an amnesty for any accrued penalties.

The consultation document can be found on GOV.UK.

Our submission can be found here: Off-payroll working in the private sector – LITRG response

(28-05-2019)

Contact: Meredith McCammond (please use form at Contact Us) or follow us on Twitter: @LITRGNews