Lords committee to investigate the extension of off-payroll working rules

The House of Lords Finance Bill subcommittee has launched an inquiry on the government’s proposal to extend the off-payroll working rules to the private sector from April 2020. 

This inquiry focuses on whether the government has assessed adequately the impact of the extension of the rules to the private sector. In particular, is the assessment that has been made of the compliance burden – including costs – of these new rules realistic? Has the right balance been struck in the compliance burden on the taxpayer and on HMRC?

It will also consider the effect the new measures will have on a chain of contractors and subcontractors and what HMRC should do to help businesses to understand the new regime. In addition, the Lords would like to know whether the tests for determining employment for the purposes of these rules is clear to both engager and worker. They would like to hear users’ assessment of the check employment status for tax (CEST) tool and whether it requires improvement.

The subcommittee is asking about the real-life experiences of individuals and organisations, as well as the impact of these and earlier measures on the tax classification of workers and the broader impact on the labour market.

In the wider context, the inquiry will examine how the new measures relate to changes in working arrangements, including the gig economy. For example, is it fair that some individuals are taxed as if they are employees, but do not have the rights of employees?

Overall, the subcommittee asks if there are ‘better or simpler ways in which the objective of the new rules might be achieved’?

Lord Forsyth of Drumlean, chair of the Finance Bill subcommittee, said: ‘The government is proposing to extend the off-payroll working rules to large and medium-sized organisations in the private sector. We are interested in how this change will work in practice, and how it relates to wider changes in working arrangements.

‘To inform our work we want to hear from as broad a range of people and organisations as possible. If you have a view on off-payroll working rules, please let us know what you think.’

The deadline for the submission of written evidence is 25 February 2020.