Off-payroll working – preparing for April 2020 changes

Last month we highlighted recent HMRC guidance on changes to the existing off-payroll working rules being implemented in April 2020 which will affect the HE sector (you can find that article here).

Building on that article, we have highlighted difficulties that HEIs may have with the operation of the new rules and what actions you should consider taking now to prepare for those changes:

1. Status determinations must be provided to the worker; currently a determination need only be provided if specifically requested.  From April 2020, this must be provided at the outset of the arrangements and given to the worker and the next person in the supply chain (if that isn’t the personal service company, 'PSC').  NB – we are awaiting further information on what details the status determination should include and we will update our members as soon as HMRC publish additional guidance.

Potential difficulty: where the HEI does not have direct contact with the worker because, perhaps there is a third party involved such as a recruitment agency, it relies on the third party informing the HEI that they are using an individual providing their services through a PSC.  The HEI must provide a status determination, however, they may not necessarily know that the requirement exists because they were not aware the individual provided their services to the agency via a PSC. 

Practical consideration: HEIs should review contracts with third parties, particularly recruitment agencies, to ensure that both parties are aware of their responsibilities under the new rules and have appropriate legal indemnities for any failures.  Contracts may need to be revised to oblige the agencies to inform your university if workers are engaged via PSCs, and your procurement teams should be made aware of the new rules.

1. Employer directed dispute resolutions – once a status determination is provided, the worker is entitled to dispute that decision. HEIs must ensure that they have policies and processes to review the decision, decide on accuracy, undertake new status assessments (if required), retain all appropriate paperwork and inform the worker within 45 days of the dispute.  If you fail to provide a response within 45 days, the HEI becomes responsible for the worker’s tax and NIC.

Potential difficulty: currently, HMRC have not issued guidance on acceptable processes, practices and information to either retain or provide to the worker when informing them of your decision.  It is difficult to build a policy without the certainty of HMRC guidance.

Practical consideration: whilst we wait for further HMRC guidance, there are actions HEIs should consider in order to start building a framework for their dispute resolution or disagreement process for April 2020:

• Who is currently responsible for determining employment status of off-payroll workers?
• Who in the university will be involved in the dispute resolution process?
• Who will have the responsibility of checking the original determination?
• Who will have overall responsibility for the dispute resolution process?
• Are there appropriate lines of communication between the above individuals?
• Are your contracts being reviewed to include references to your dispute resolution procedures?

It is important to note that HMRC believe the disagreement processes should be very much employer led. It seems prudent not to wait for HMRC to issue guidance before creating your policy on this as it may not be published in time to create workable practices. 

As soon as further guidance is published, we will provide this to our members.