Sopra Steria Recruitment has responded to the proposed changes to IR35 in the private sector. The rules are due to come into effect in April 2020, when businesses will become responsible for assessing an individual’s employment status. The commentary also stated that there will be a further consultation, to influence the way in which these changes are introduced, plus a statement that small businesses will be excluded from the new rules.
In Sopra Steria Recruitment’s response to the consultation, it proposed an alternative to the suggestions put forward: to ensure administration associated with any changes is as simple as possible, HMRC should use the data already provided by ‘agencies’ through employment intermediary reporting to track down all workers operating as PSCs and receiving gross payments. It also recommend that HMRC issue a Check Employment Status for Tax (CEST) questionnaire to each worker, demanding verification by the client and worker for issue to HMRC so that it is able to assess tax status directly from the PSC for each worker, on a monthly basis.
“Although we are pleased that the government has listened to the point we made about true engagement with all parties, we are disappointed that the intent still seems to be to force end-users to become tax assessors and employment businesses to become ‘tax deductors’,” said Pete Holliday, managing director, Sopra Steria Recruitment. “We responded directly to HMRC and HMT as well as supporting APSCo in its response. We also managed to get many of our Private Sector clients involved whom we believe responded directly, from an end-user perspective.
“Our consultation response, and our dialogue with our clients, focused on the flawed ownership and method of assessing the tax status of thousands of PSC contractors – specifically that it is inappropriate to ask a user of flexible workers to become a tax assessor and to ask Employment Businesses to become tax deductors,” he adds. “We are disappointed that the Chancellor has indicated that changes will be brought in, in line with those already in place in Public Sector. We still hold the view that HMRC should do this work in the same way that it does for employed individuals, under self-assessment or HMRC assessment.”
Holliday says he does welcome the postponement of the changes until April 2020, as this will allow time for further consultation and for end users and employment businesses to prepare themselves to change their business models to be able to manage multiple contractor tax assessment and deduction. That said he is disappointed that the government has not responded to the impact on the companies who will be facing these changes in terms of unrecoverable costs, compliance, their ability to retain key skills and the continuation of flexible working that drives the UK economy. “We trust that the indicated further consultation will address these fundamental issues,” he concludes.