20 November 2019 Julia Ascott, Employment Taxes Specialist
Last month we highlighted recent HMRC guidance on changes to the existing off-payroll working rules being implemented in April 2020 which will affect the HE sector (you can find that article here).
Building on that article, we have highlighted difficulties that HEIs may have with the operation of the new rules and what actions you should consider taking now to prepare for those changes:
Potential difficulty: where the HEI does not have direct contact with the worker because, perhaps there is a third party involved such as a recruitment agency, it relies on the third party informing the HEI that they are using an individual providing their services through a PSC. The HEI must provide a status determination, however, they may not necessarily know that the requirement exists because they were not aware the individual provided their services to the agency via a PSC.
Practical consideration: HEIs should review contracts with third parties, particularly recruitment agencies, to ensure that both parties are aware of their responsibilities under the new rules and have appropriate legal indemnities for any failures. Contracts may need to be revised to oblige the agencies to inform your university if workers are engaged via PSCs, and your procurement teams should be made aware of the new rules.
Potential difficulty: currently, HMRC have not issued guidance on acceptable processes, practices and information to either retain or provide to the worker when informing them of your decision. It is difficult to build a policy without the certainty of HMRC guidance.
Practical consideration: whilst we wait for further HMRC guidance, there are actions HEIs should consider in order to start building a framework for their dispute resolution or disagreement process for April 2020:
It is important to note that HMRC believe the disagreement processes should be very much employer led. It seems prudent not to wait for HMRC to issue guidance before creating your policy on this as it may not be published in time to create workable practices.
As soon as further guidance is published, we will provide this to our members.