The ICAEW, the CIOT, and the ACCA raised issues regarding arrangements’ complexity, a short period of time to prepare before the changes come into effect and the CEST’s highly-controversial performance as an assessment tool by workers and businesses to assess an engagement’s employment status.
Meanwhile, it was proposed by the government that the tax treatment in the private sector regarding the off-payroll can be modified after April 2020; implementing the same changes that were introduced in 2017 for the public sector. During the off-payroll working rules’ 2020 consultation, HMRC received a wide range of responses, offering the government something to contemplate for the time being.
The ICAEW provided an official submission to the consultation in which they were concerned about a number of issues regarding the current proposals. They warned that if the matter is not handled properly, then it can create an air of confusion around the off-payroll working rules. The primary points were the following.
- The idea of implementing changes in April 2020 was incorrect; it was too soon. Since engagers need a minimum of 12 months for adjusting those systems that are responsible for the payment of contractor invoices; considerable lead time is going to be required when the off-payroll adjustments are added in the private sector. It was recommended by the body that if the government is sure about the implementation, then they should wait till at least April 2021.
- The ICAEW lauded the move to exempt small businesses who engaged contractors. However, there were complications regarding the definition of “small” while the carve-out was clearly a short-term solution, rather than a long-term solution. If both the private and public sectors have different tax regulations; it is detrimental, according to the Institute. As a consequence, it can give rise to more injustice, complexity, and an increase in the administrative burden.
- According to the consultation, when tax liabilities will be transferred, it might cause the creation of unjust results.
- There should be a system in place for independent, real-time appeal in response to a tax status decision.
ACCA on the other hand has also asked the government to postpone these rule modifications and undertake steps that can reassure the contractors for the tax status.