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Reform of Rules for those Workers Engaged by the Public Sector through an Intermediary

on Friday, 10 February 2017.

In the 2016 Autumn Statement, the government announced that it would be implementing legislation to reform the intermediaries rules (IR35), for those engaged by the public sector through an intermediary...

... meaning tax and National Insurance Contributions will be paid in a similar way to that of an employee.

HMRC has published draft regulations (the Social Security (Miscellaneous Amendments) Regulations 2017) which form part of these reforms and make provision for the payment of NICs. This follows draft legislation for the Finance Act 2017 published in December 2016.

The government is introducing reforms to this area in order to clamp down on the avoidance of tax and NICs as reported in a previous article. In the public sector, responsibility for operating off-payroll working rule and accounting for deduction will move to the engaging party.

It is very possible the reform will transpose to the private sector if deemed a success within the public sector. The draft regulations have been published for technical consultation which will close on 17 February 2017. The reform will take effect from 6 April 2017.

Who is affected by the changes?

The following groups will be affected by the reforms:

  • public authorities who hire off-payroll contractors
  • public sector tax managers, payroll managers, human resources managers and procurement managers
  • agencies and third parties who supply contractors to the public sector
  • contractors who provide their services to a public authority through an intermediary

These groups will need to prepare for the reforms in advance of the 6 April 2017 implementation date.

For more information or if you require any tailored assistance in preparing for the implementation of the reforms, please contact our Employment Law specialists Allison Cook on 0117 314 5466 or Charlotte Williams on 0117 314 5219.

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