2023 Autumn Statement - HMRC responds to consultation on off-payroll working 'set-off' mechanism
HMRC has responded to the consultation on the proposed introduction of legislative change, to address the potential over-collection of tax under the off-payroll working rules.
Background
In its Spring 2023 Tax Day consultation, the Government sought views on the proposed introduction of a legislative mechanism to address the potential over-collection of tax under the rules. The change would allow HMRC to account for taxes already paid by an individual or their intermediary when calculating PAYE liability due by a deemed employer where an error has been made in applying the off-payroll working rules. This is known as a 'set-off'.
The response
As part of the 2023 Autumn Statement, HMRC has published its response to the consultation.
The response confirms that legislation will be introduced in the Finance Bill 2024 to enable HMRC to establish the proposed set-off mechanism with effect from 6 April 2024. The relevant legislation will cover settlements made on or after 6 April 2024 that arise from errors in operating the rules from 6 April 2017.
HMRC has offered some deemed employers with open compliance checks a pause in settlement negotiations, until the set-off mechanism is in effect. However, settlements already closed will not be eligible for set-off.
Regulations will be introduced via secondary legislation after the Finance Bill obtains Royal Assent. We will continue to report on developments as they occur.