The cancellation of this month’s Budget should lead to a delay to a fundamental change in the way businesses employ the services of contractors, according to the Association of Tax technicians (ATT).
The change is planned for April 2020, but the ATT is calling now for it to be delayed by 12 months. It says the longer the delay to the Budget and Finance Bill, the longer businesses will have to wait for the final legislation that will “introduce these controversial changes to the off-payroll rules – leaving businesses with a greatly reduced and unrealistically short time frame in which to adapt to the changes”.
In a statement it said: “If the rules are implemented as proposed in the draft legislation then, from 6 April 2020, responsibility for determining whether an engagement falls within the off-payroll rules will move from the worker’s personal service company (PSC) to the client (the business which requires the worker’s services). The party which pays the PSC (which may be the client, or an agency depending on the commercial arrangements) will then be required to operate PAYE and NICs as appropriate.
“The lack of final legislation and detailed guidance combined with the current absence of an updated version of HMRC’s much maligned Check Employment Status for Tax (CEST) mean that there is a real lack of clarity as to how the off-payroll rules will operate in practice in the private sector. The ATT says this makes it near impossible for businesses to make adequate preparations. Under the current timetable there remains only a little over five months for businesses to get ready and this at a time when many will be preparing for or responding to the implications of Brexit.”