HMRC has published a four-point list of actions to help large and medium-sized businesses in the private sector prepare for changes to the off-payroll working rules from 6 April 2020. These changes will make engaging organisations responsible for determining whether IR35 applies to services they receive from individuals working through personal service companies (PSCs).
The four steps are:
identify those individuals in the current workforce who supply their services through PSCs;
determine whether off-payroll rules apply for any contracts extending beyond April 2020 (using HMRC’s CEST tool);
start talking to contractors about whether the off-payroll rules apply to their role;
put processes in place to determine whether off-payroll rules apply to future engagements (such as who in the organisation should make determinations and how payments will be made to contractors).
HMRC has also updated its guidance for agents on the public sector off-payroll rules, to confirm that the accounts of a contractor’s personal service company may be prepared under either a gross or net receipts basis when work is carried out for a public sector organisation.
The technical note for agents, published in March 2017, originally said accounts should be drawn up using the amount received net of tax and NICs. The revised note acknowledges that the tax result would be the same whether a gross or net accounting method is used but states that preparers of the accounts should consider the most suitable approach to ensure the financial statements are prepared in accordance with UK GAAP.
Under a gross accounting method, the gross amount before tax and NICs is accounted for as turnover, and the personal service company will have an expense debit to write off a part of the debtor balance that it will not receive. This write off in the accounts would reflect the income tax and NICs deducted by the fee payer.
See ‘Off-payroll working in the public sector: reform of the intermediaries legislation: information for agents’ (section 13), bit.ly/2ID47Qu.
HMRC has published a four-point list of actions to help large and medium-sized businesses in the private sector prepare for changes to the off-payroll working rules from 6 April 2020. These changes will make engaging organisations responsible for determining whether IR35 applies to services they receive from individuals working through personal service companies (PSCs).
The four steps are:
identify those individuals in the current workforce who supply their services through PSCs;
determine whether off-payroll rules apply for any contracts extending beyond April 2020 (using HMRC’s CEST tool);
start talking to contractors about whether the off-payroll rules apply to their role;
put processes in place to determine whether off-payroll rules apply to future engagements (such as who in the organisation should make determinations and how payments will be made to contractors).
HMRC has also updated its guidance for agents on the public sector off-payroll rules, to confirm that the accounts of a contractor’s personal service company may be prepared under either a gross or net receipts basis when work is carried out for a public sector organisation.
The technical note for agents, published in March 2017, originally said accounts should be drawn up using the amount received net of tax and NICs. The revised note acknowledges that the tax result would be the same whether a gross or net accounting method is used but states that preparers of the accounts should consider the most suitable approach to ensure the financial statements are prepared in accordance with UK GAAP.
Under a gross accounting method, the gross amount before tax and NICs is accounted for as turnover, and the personal service company will have an expense debit to write off a part of the debtor balance that it will not receive. This write off in the accounts would reflect the income tax and NICs deducted by the fee payer.
See ‘Off-payroll working in the public sector: reform of the intermediaries legislation: information for agents’ (section 13), bit.ly/2ID47Qu.
