HMRC has published an issue briefing to explain the approach that it will take for new compliance activity in relation to the changes to the off-payroll working rules from 6 April 2021 for large and medium-sized organisations in the private sector. The paper sets out the background to the rules and the reforms, and provides details of the help and support HMRC will provide.
From 6 April 2021, responsibility for determining whether the rules apply will shift from the contractor’s personal service company (PSC) to the client organisation engaging them. If the rules apply, the client organisation, or the agency or third party paying the contractor’s PSC, is then responsible for accounting for employment taxes and NICs.
The issue briefing outlines the principles that will underpin HMRC’s compliance activity in relation to these new rules, from supporting taxpayers who are trying to comply with the rules to challenging deliberately non-compliant taxpayers and avoidance schemes that claim to avoid the rules. HMRC also explains that it will use a specialist team to carry out all off-payroll compliance activity but that, where a taxpayer has a customer compliance manager, HMRC will use that relationship to manage compliance with the rules.
The paper also sets out a number of case studies, illustrating the steps HMRC will likely take in different scenarios.
Back in February 2020, HMRC announced that penalties for inaccuracies will not be applied in the first 12 months of the off-payroll working rules, unless there is evidence of deliberate non-compliance, and that HMRC will not use the information acquired as a result of the new rules to open a new compliance enquiry into the returns for tax years before 2021/22 unless there is reason to suspect fraud or criminal conduct.
HMRC has published an issue briefing to explain the approach that it will take for new compliance activity in relation to the changes to the off-payroll working rules from 6 April 2021 for large and medium-sized organisations in the private sector. The paper sets out the background to the rules and the reforms, and provides details of the help and support HMRC will provide.
From 6 April 2021, responsibility for determining whether the rules apply will shift from the contractor’s personal service company (PSC) to the client organisation engaging them. If the rules apply, the client organisation, or the agency or third party paying the contractor’s PSC, is then responsible for accounting for employment taxes and NICs.
The issue briefing outlines the principles that will underpin HMRC’s compliance activity in relation to these new rules, from supporting taxpayers who are trying to comply with the rules to challenging deliberately non-compliant taxpayers and avoidance schemes that claim to avoid the rules. HMRC also explains that it will use a specialist team to carry out all off-payroll compliance activity but that, where a taxpayer has a customer compliance manager, HMRC will use that relationship to manage compliance with the rules.
The paper also sets out a number of case studies, illustrating the steps HMRC will likely take in different scenarios.
Back in February 2020, HMRC announced that penalties for inaccuracies will not be applied in the first 12 months of the off-payroll working rules, unless there is evidence of deliberate non-compliance, and that HMRC will not use the information acquired as a result of the new rules to open a new compliance enquiry into the returns for tax years before 2021/22 unless there is reason to suspect fraud or criminal conduct.
