Businesses operating in the oil and gas, banking and finance sectors are being targeted by HMRC to confirm that they are complying with the off-payroll working regime introduced in April 2021.
Since 6 April 2021, it has been the responsibility of all private sector engagers, other than small businesses, to ensure that the employment status of their contractors is determined correctly and, if the off-payroll working (OPW) rules require, for them to be paid through a payroll.
ICAEW’s Tax Faculty understands that HMRC has been issuing letters to organisations operating in the oil and gas, banking and finance sectors to confirm either that they are correctly operating the OPW rules or PAYE, where applicable.
The letter asks to understand more about the organisation’s process for hiring contractors. The challenge for many larger organisations is that contractors invoice for their work and are handled by purchase ledger teams with the risk that status checking is overlooked by human resources and payroll teams.
These compliance checks follow a number of large settlements by the public sector, which has been subject to the OPW rules, commonly known as IR35, since 2017. It has been reported that these settlements amount to £87.9m for the Department for Work and Pensions, £33.5m for the Home Office and £12.5m for the HM Courts & Tribunal Service.
More support on tax
ICAEW's Tax Faculty provides technical guidance and practical support on tax practice and policy. You can sign up to the Tax Faculty's free enewsletter (TAXwire) which provides weekly updates on developments in tax.Sign up for TAXwireJoin the Tax Faculty
This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.