It’s over a year since major changes to the off-payroll working (OPW) rules came in. The 12-month grace period for compliance is now over and any errors or inaccuracy could lead to fines.
The OPW regime requires that a decision on employment status is made for tax purposes. This is broadly analogous to the decision required under the IR35 rules for those working through an intermediary (typically a personal service company).
The government’s aim is that individuals who work ‘like’ employees but offer their services through an intermediary, will pay roughly the same income tax and National Insurance contributions as employees. In 2021 the responsibility for making the employment status decision passed from contractor to client, in medium and large-sized organisations. Engagements between contractors and small organisations did not change.
Initially, HMRC operated a ‘light-touch’ approach to compliance, meaning penalties were not charged for inaccuracies relating to the new rules unless there was evidence of deliberate non-compliance. However, from 6 April 2022, they are taking a stricter approach to compliance.
Next steps if you are affected by the off-payroll working rules
Whether you are the contractor or the hirer, we recommend taking stock of your position. Determining the status of a worker is always a finely balanced decision. Please contact us for an OPW/IR35 health check to mitigate the risks and improve business confidence.