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Off-payroll working rules consultation – Law Society response

The proposals

HM Revenue and Customs (HMRC) is consulting on a proposal to extend the off-payroll tax rules to the private sector from April 2020.

The off-payroll working rules were introduced for engagements in the public sector in April 2017.

The rules are used to determine how employment taxes apply to individuals who provide services to a client through an intermediary (such as a personal service company).

The proposals would:

  • shift the requirement to determine employment status from the worker to the client
  • affect the obligation to account for such tax to HMRC

Our view

As the proposals currently stand, we expect the new rules to the problematic in practice.

They shift the risks of getting employment status determinations right to taxpayers in a way that is unfair.

The secondary liability provisions proposed would also shift risks of default to compliant taxpayers.

What this means for solicitors

Solicitors who advise on employment tax matters would be affected by these proposals.

The proposals would also have an impact on solicitors who work through personal service companies and law firms that engage solicitors through them.

Next steps

The consultation closed on 28 May.

The consultation will inform the draft Finance Bill legislation, which is expected to be published in summer 2019.

We expect the reforms to come into force from 6 April 2020.

Read the consultation on the GOV.UK website

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