Hammond may extend off-payroll rules to private sector

A second tax specialist has raised the prospect of Philip Hammond using Budget 2017 to extend the public sector’s off-payroll rules to the private sector.

Bill Dodwell, head of tax at Deloitte, said the chancellor could “signal a move” on Wednesday to ask private sector engagers to follow their public counterparts in assessing whether PAYE should be operated on PSCs.

His comments came after Duncan Strike, a director at Intouch Accounting, said Mr Hammond might use his Autumn Statement 2016 crackdown on limited company workers at non-commercial outfit as a “foundation to build on,” on March 8th

Both tax experts indicated that a consultation was more likely to be announced than an instant extension to the private sector, especially as Mr Dodwell noted such a move as “highly complex.”

Another adviser, Barry Roback, director of the Anderson Group, has called the potential roll-out “quite a challenge,” not because of the anticipated opposition but because the reforms are yet to take root or succeed in the public sector.

Imposing a version of the public sector’s new IR35 framework (scheduled for April 6th) on the private sector would also “need some time to implement,” Mr Dodwell said, alluding to the obligations it would foist on recruiters and clients.

However, the unveiling of the IR35 digital tool just days before the Budget might be significant, as it means the chancellor could on Wednesday point out directly to end-user companies the means with which they (or their agents) would in future gauge PSCs’ IR35 status.   

“Public sector bodies will take on responsibility for assessing whether services are provided by quasi-employees through their personal service companies,” Mr Dodwell said.

“It is clear that the challenges to the tax system of new ways of working will need to be considered and it is possible that the chancellor could use the Budget to launch a high-level consultation.”

Mar 06, 2017