Off-Payroll Workers - New Rules Since 6 April 2021

Since 6 April 2017 all Public Bodies that use the services of a worker who is paid ‘off-payroll’ (supplied by an intermediary) must decide whether workers would be employees and/or office holders if engaged directly. This has been extended to all large and medium sized private sector organisations from 6 April and the new rules bring some new responsibilities for Public bodies as well. Small private Practices may be exempt from the rules.

Wherever locums or other workers are supplied by an intermediary, the practice must check on their status to assess if they would be employees and/or office holders if engaged directly by the Practice. Where the individual would be a deemed employee or office holder:

• If the Practice pays the intermediary directly, the Practice must send the worker a Status Determination Statement (SDS) and deduct PAYE and NIC from the payment and pay it to HMRC through RTI (as for employees). In addition, the Practice will be required to pay employer’s NIC
• If the Practice uses an employment agency (or other third party) to source the Locum and pays that third party, the Practice will be required to assess if the new rules apply and advise the third party of the outcome of that decision by sending out an SDS. The third party must then deduct PAYE and NIC and pay employers NIC.

Public bodies that have already put systems in place to deal with off-payroll hires now also need to build in an appeals process. From 6 April 2021, workers have a right of appeal against the status determination carried out by the engager and, although there is no formal appeal mechanism, practices must set up a process to consider any appeals. Where the worker contests the determination, the Practice must respond to the worker within 45 days. If the Practice concludes that the original determination is correct it must provide reasons for its conclusion, whilst if it concludes that its initial determination was incorrect, it must issue a new SDS.

It should be noted that HMRC will not intervene in any appeal or subsequent disputes. However, failure to respond to the worker with the 45 days may result in the Practice being treated as the fee-payer and becoming liable for tax and NIC.

It is important to document the work your practice does to establish the employment status of the locums and other off-payroll workers you use. Remember this is not a one-off issue: if a locum arrangement is not ‘deemed employment’ when first instigated, it may become deemed employment if it is regularly renewed. Similarly, repeated contacts with the same individual does not guarantee that there is deemed employment – you have to check for each contract.

If you have any questions on the off-payroll rules please contact Geraldine Browne.