In 2012, HM Treasury implemented a set of rules which required Departments’ most senior staff to be on payroll, and to seek assurance in relation to the tax arrangements of their long-term, high-paid contractors who are off-payroll.
Reforms to IR35 off-payroll working rules in April 2017 require public bodies to deduct tax and NICs if the off-payroll worker works like an employee, compliance of which is monitored by HMRC.
Following a review of the rules, I have concluded that the off-payroll rules implemented in 2012 are now superseded by the IR35 reforms, and the requirement for Departments to include set contractual provisions and conduct an assurance process are no longer necessary.
However, it remains essential that board-level appointments and/or those with significant financial responsibility should be on the payroll of the Department or other employing body, unless there are genuine exceptional circumstances that do not exceed six months. The HMT off-payroll rules have been amended to reflect the outcome of this review, and updated guidance has been published on the Government website, https://www. gov.uk/government/publications/guidance-for-tax-assurance-process-of-public-sector-appointees
This guidance includes increased transparency requirements, whereby the duration of off-payroll engagements of board members and/or senior officials with significant financial responsibility is to be reported in Departments’ annual accounts in future reporting cycles. This will replace the need for annual reviews.
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