This briefing was updated on 12 March 2021.
In the Budget announced on 3 March, the Chancellor did not announce any further delay to the new Off-Payroll rules which will take effect in the private sector from 6 April 2021 as planned.
The new Off-Payroll Working Rules had been due to take effect in 2020 but were delayed for a year in light of the Covid-19 pandemic. Those hoping the Chancellor would announce a further postponement were left disappointed as the recent Budget confirmed that the new rules will apply from 6 April 2021. Any business engaging workers through intermediaries (such as personal service companies) must ensure that they are fully prepared for the changes. HMRC have stated that they are keen to support businesses and have confirmed their pledge not to impose penalties in the 2021-22 tax year unless there is evidence of deliberate non-compliance. HMRC have also said that (unless they have reason to suspect fraud or criminal conduct) they will not use information acquired as a result of the rules to open a new compliance enquiry into the returns for earlier tax years. The Finance Bill includes a number of additional changes that will have effect from 6 April 2021. Some of these are technical amendments which are intended to make the rules operate as planned. There is also a new Targeted Anti-Avoidance Rule aimed at avoidance arrangements seeking to circumvent the conditions for a company or partnership to be an intermediary for the purposes of the rules. A further change will ensure that any party in the labour supply chain providing fraudulent information will be held liable for any tax due.
For more information about the new Off-Payroll Working Rules and how they will operate in practice please view recordings of our webinars here:
Off-Payroll Workers: Prepare now for the 2021 changes
The Off-Payroll Working Rules in Practice: Paperwork, Process, PAYE