Get ready for the ‘off-payroll’ working rules

Where large or medium-sized organisations are paying workers via personal service companies or agencies they will need to operate new procedures from 6 April 2020.

The new rules will apply to LLPs and larger charities as well as limited companies. Only those organisations that would be classed as “small” under the Companies Act criteria will be outside of the new rules.

From 6 April 2020 the end user organisation will be required to determine whether or not the worker would be an employee of the organisation if directly engaged. That determination will need to be communicated to the agency supplying the worker so that income tax and national insurance is deducted from any payments. Where there is no agency the end client will operate PAYE on the invoiced payments.

The end user organisation must take “reasonable care” in determining employment status, meaning blanket decisions will not be acceptable. HMRC plan to develop their online tool, the Check Employment Status for Tax (CEST), and this can be used to help with the decision. Once a decision is made a copy of the determination must be given to the worker and the intermediary.

What if the worker disagrees?

Where the worker disagrees with the employment status determination they should contact the end user straight away setting out their grounds for disagreement.

The end user must provide a response within 45 days of receiving the disagreement. During this time they should continue to apply the rules in line with the original determination.

For further information on “off-payroll” working, please contact Alan Rolfe on 023 8046 1235.

Find out more about our Payroll Services.