SMEs ‘Confused About Off-Payroll Rule Changes’

The government needs to improve clarity with regards to upcoming changes to the off-payroll rules.

This is according to the Association of Taxation Technicians (ATT), which is calling for HMRC to provide more detail in the draft legislation for Finance Bill 2019-20 to account for the off-payroll legislation alterations that will come into effect in April next year.

After the new finance year begins, off-payroll rules that apply to contractors in the public sector will also be applicable for those in the private domain. As a result of this, instead of the worker’s personal service company (PSC) having to determine whether off-payroll rules operate regarding an engagement, the responsibility will lie with the business that requires the services.

In the case where the rules are applicable, the engager or agency that pays the worker’s PSC will have to contribute the appropriate tax and National Insurance payments.

There is a particular lack of detail about what happens if another party in the labour supply chain fails to meet their obligations under the new legislation, and if the agency or engager would then become liable for unpaid tax or National Insurance contributions. This could be the case even if they fulfilled their role and complied appropriately with the regulations. 

Co-chair of ATT’s technical steering group Michael Steed said these changes are confusing many small and medium-sized enterprises (SMEs), which is making it hard for them to prepare for the update.

“Uncertainty in how the off-payroll rules will operate in practice is making it difficult for businesses to make adequate preparations. We encourage HMRC to release more information and detailed guidance as soon as possible,” Mr Steed stated.

Clarifying the details about liability would enable businesses to better prepare for the changes and how they are likely to be affected by the off-payroll rules.

“There remains much work to be done to ensure that private sector engagers and agencies are both aware of the changes and ready for them. The current lack of clarity on some key areas makes it difficult for businesses to prepare properly.  More information and detailed guidance from HMRC is urgently needed if the roll out of these new rules will succeed,” the ATT spokesperson stated.

He noted that businesses only have six months in order to make these changes, during which time they will also be responding to Brexit repercussions.

The British Chambers of Commerce (BCC) recently predicted productivity in the UK could decline following Brexit.

Its latest economic forecast showed it downgraded growth expectations for the UK in 2019 to 1.2 per cent (from a higher 1.3 per cent). It also dropped its growth expectations for 2020 from one per cent to 0.8 per cent.

It also anticipated business investment could fall by 1.5 per cent in 2019, dropping by a further 0.1 per cent next year.

This is likely due to the uncertainty surrounding Brexit and the increasing possibility of leaving the European Union with no deal.

If you want to talk to a London business consultant to help you understand the impact of a no-deal Brexit or the off-payroll changes and what you can do to protect your SME, get in touch with us today.

Leave a Comment

Your email address will not be published. Required fields are marked *

ben crampin


Ben’s been here pretty much since the get-go and, as such, has been instrumental in growing the business into what it is today.
He’s passionate about, in his words, ‘helping people and businesses that are just constantly being taken advantage of’ by providing affordable advice and support with an eye to ‘levelling the playing field’.
Ben looks forward to the day when automation will, once and for all, fumigate the fear and confusion caused by oppressive bureaucracy and strongly believes that ‘technology holds the solutions to the problems we’re trying to solve’.
Furthermore, he can see that technology will, in time, provide the scalability required to help a theoretically limitless number of SMEs survive and thrive against the odds.
Ben doesn’t think much of government agencies and he doesn’t suffer fools; two points that aren’t always mutually exclusive.