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Off payroll working in the private sector – Crunch submission to Government consultation

Posted on Aug 2nd, 2018 | Tax

The government’s consultation on proposed changes to off payroll working in the private sector closes on 10th August 2018. We’ve written a letter to the government including our detailed response to the 34 questions included in the consultation.

Crunch was delighted to include the views of 542 of our clients who completed our online questionnaire. We’ve pulled together a full analysis of your responses.

At Crunch, we believe it’s too early to assess the effectiveness of measures introduced for the public sector in 2017 to increase compliance with off payroll working rules. We believe the government can achieve its objectives for improving the level of compliance with off payroll working rules, and increasing tax revenues, by taking the following action.

  1. Complete the further evaluation needed following the introduction of the new rules to the public sector, with a particular focus on the impact on the market for freelancers and contractors, and the impact on the provision of labour to the public sector
  2. New rules, if introduced, should not apply to the smallest private sector businesses. We’re suggesting the new rules should not apply to businesses with turnover of less than £50 million. This will ensure only those organisations with the resources, capacity, and expertise to implement the new rules are required to do so.
  3. Personal service companies working with businesses with turnover of less than £50 million should continue to operate under existing rules.
  4. A lead time of at least 18 months is required to implement new rules. This will:
    • enable further evaluation of the impact of the rules on the public sector to be completed, and for good practice to be disseminated by the government to the private sector.
    • provide an opportunity for private sector businesses to establish arrangements to implement the new rules, including engaging the personal service companies they work with in the change.
    • enable any penalty regime to be established by HMRC alongside an effective enquiry service.

We’ll continue to keep you updated as the government considers responses to this consultation.

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