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As you will be aware, FCSA has been active in assisting HMRC to redress the concerns regarding the wording of section 61O of Chapter 10 ITEPA and the definition of a company intermediary.
Our CEO, Phil Pluck has recently received the following encouraging communication from the Off-Payroll Working Programme that coincided with an announcement made by the Financial Secretary to the Treasury Written Ministerial Statement published on 12 November:
In our meeting on 14 October and subsequent stakeholder update note regarding the unintended widening of the definition of a company intermediary, we committed to providing further reassurance and certainty to you and your members on how HMRC would correct this unintended consequence.
Having considered this issue in detail, we agree that a change to the legislation is required. As part of today’s tax legislation announcements, the Government has confirmed that a technical change to the off-payroll working rules will be included in Finance Bill 2021. This will ensure the legislation operates as intended from 6 April 2021 for engagements where an intermediary is a company. A corresponding amendment will be made to the NICs regulations once the Finance Bill has been introduced to Parliament and before 6 April 2021.
The announcement can be found in the Financial Secretary to the Treasury’s Written Ministerial Statement at https://questions-statements.parliament.uk/written-statements/detail/2020-11-12/hcws572.
Businesses and individuals should continue to prepare on the basis that Chapter 10 will not apply where an individual performs services for a client and that individual is already engaged under a contract of employment and their earnings are subject to PAYE by another party, other than that individual’s intermediary, in that supply chain. For example, if a worker is employed by an Umbrella Company that operates PAYE on the payment to the worker and that worker performs services to a client, Chapter 10 should not be applied. Similarly, the secondment of employees to other organisations would not be in the scope of Chapter 10.
We hope this provides further reassurance and certainty to you and your members that the off-payroll working rules will apply as intended from 6 April 2021, and businesses should prepare on that basis.
We will work closely with members on the detail of this change. We will arrange a discussion of the technical aspects with interested parties over the next month.
Off-Payroll Working Programme
To read Financial Secretary to the Treasury Written Ministerial Statement, click here >