Déjà vu – here we go again

Following on from April 2020 when the Off-Payroll rules were deferred to April 2021, we’re now starting to see activity again on Off-Payroll. Some agencies have contacted our freelance clients to say that the end client wants to start an Off-Payroll status assessment as the legislation is due to start in April 2021.

To remind us all, Off-Payroll is the label for new tax legislation that is really an wrapper for IR35 that has been with us for 20 years. This was due to start in April 2020 but at the last minute was differed for a year to April 2021. The bite to this new legislation is that it makes the end client responsible for the tax and national insurance relating to amounts paid to a freelancer, if that engagement is considered to be employment style rather than self-employment style. That changes the whole game of course, when the end client will potentially be hit hard both in their pocket and equally important in having to step up their whole engagement procedure to do status assessments.

This tax is wrong in all sorts of ways. It makes no real attempt to provide a proper framework for fair assessments, which review all the working circumstances between an engager and a freelancer. The CEST (Check Employment Status for Tax) tool HMRC provides for engagers to use and which they defend volubly, is naive of case law and simplistic to the nth degree. I think I could get my primary school grandchild to create a better tool. Come to think of it, maybe that’s how HMRC created their tool in the first place.

What is especially unfair in our Corona changed world is that the Government is throwing billions of pounds into the economy to protect employment and seems to have a complete blind spot that the Off-Payroll rules will challenge and very possibly destroy thousands of freelance positions, damaging both the economy and the honest livelihood of freelance contractors.

I URGE YOU ALL to please write to your MP’s to tell them that this madness must be stopped and a proper compliance system need to be set up to control this sector, not a quick fix solution which isn’t fair and doesn’t work. Please advise us of your communications with your MP and responses.

Please also let us know about any contact you have with agencies and end clients so we can get a good overview of what’s happening in the marketplace and provide you with advice on your options.

As always, we very much care about all our clients and are here to help you.

Best regards,

Victor Korman
Managing Director
Cogent Accountants