The government needs to improve clarity with regards to upcoming changes to the off-payroll rules.
This is according to the Association of Taxation Technicians (ATT), which is calling for HMRC to provide more detail in the draft legislation for Finance Bill 2019-20 to account for the off-payroll legislation alterations that will come into effect in April next year.
After the new finance year begins, off-payroll rules that apply to contractors in the public sector will also be applicable for those in the private domain. As a result of this, instead of the worker’s personal service company (PSC) having to determine whether off-payroll rules operate regarding an engagement, the responsibility will lie with the business that requires the services.
In the case where the rules are applicable, the engager or agency that pays the worker’s PSC will have to contribute the appropriate tax and National Insurance payments.
There is a particular lack of detail about what happens if another party in the labour supply chain fails to meet their obligations under the new legislation, and if the agency or engager would then become liable for unpaid tax or National Insurance contributions. This could be the case even if they fulfilled their role and complied appropriately with the regulations.
Co-chair of ATT’s technical steering group Michael Steed said these changes are confusing many small and medium-sized enterprises (SMEs), which is making it hard for them to prepare for the update.
“Uncertainty in how the off-payroll rules will operate in practice is making it difficult for businesses to make adequate preparations. We encourage HMRC to release more information and detailed guidance as soon as possible,” Mr Steed stated.
Clarifying the details about liability would enable businesses to better prepare for the changes and how they are likely to be affected by the off-payroll rules.
“There remains much work to be done to ensure that private sector engagers and agencies are both aware of the changes and ready for them. The current lack of clarity on some key areas makes it difficult for businesses to prepare properly. More information and detailed guidance from HMRC is urgently needed if the roll out of these new rules will succeed,” the ATT spokesperson stated.
He noted that businesses only have six months in order to make these changes, during which time they will also be responding to Brexit repercussions.
The British Chambers of Commerce (BCC) recently predicted productivity in the UK could decline following Brexit.
Its latest economic forecast showed it downgraded growth expectations for the UK in 2019 to 1.2 per cent (from a higher 1.3 per cent). It also dropped its growth expectations for 2020 from one per cent to 0.8 per cent.
It also anticipated business investment could fall by 1.5 per cent in 2019, dropping by a further 0.1 per cent next year.
This is likely due to the uncertainty surrounding Brexit and the increasing possibility of leaving the European Union with no deal.
If you want to talk to a London business consultant to help you understand the impact of a no-deal Brexit or the off-payroll changes and what you can do to protect your SME, get in touch with us today.
Looks like you reached the bottom of the article! Fancy checking out some of our other posts?
Tax season can be a stressful time for many – if you’re among those who find themselves unable to file on time, know that you are not alone and others have been in the same situation. In this blog post we will discuss your options if you find yourself unable to file on time, the consequences of late-filing, as well as available avenues of appeal against late-filing penalties.
Continue reading
The self-assessment tax deadline is quickly approaching and you may be wondering if there is any way to reduce the amount of tax you owe to HMRC. Fortunately, there are several allowances and deductions available that you may be eligible to claim. In this blog, we will explore a few examples of these allowances and how they can help you lower your tax bill. Don’t miss out on the opportunity to potentially reduce your tax burden – make sure to check if you’re eligible to claim any of these allowances.
Continue reading
If you’re self-employed and submitting your Self Assessment tax return, you may not have realised that you might need to make an additional payment called a payments on account (POA). Payments on account are payments made in advance towards your next year’s tax liability.
Continue reading
You found out you have to do a self assessment but the deadline to register has passed. What happens when you don’t register for Self Assessment in time? Can HMRC immediately start charging you penalties?If you became self-employed, made sizeable gains on shares or cryptoassets, became an LLP member or earned a six-figure salary between 6 April 2021 and 5 April 2022, then you may well have needed to register for Self Assessment.
Continue reading
