APSCo calls for more clarity around IR35 set off in its response to HMRC

The Association of Professional Staffing Companies (APSCo) and APSCo OutSource have welcomed the Off Payroll working set off proposals in a response to a now-closed HMRC consultation, but have highlighted areas for improvement if plans are to support the recruitment market.

In their response, the two trade associations have warned that the complexities of taxing the income from off-payroll working could still result in double taxation and reiterated calls to define a Personal Service Company (PSC) as a company with one worker only supplying his own services through that entity.

Tania Bowers, Global Public Policy Director at APSCo comments:

We recognise the need to introduce the Off Payroll set off and the proposals outlined are certainly a step in the right direction to ensuring fair taxes are being paid without the potential for double taxation inadvertently impacting the deemed employer, which can often be SME recruitment firms. However, this is a highly complex issue and we do feel more clarity is needed.

Under the proposals, there is the potential that set off processes could be delayed due to appeals made by the worker or the intermediary. Given the complexities in this issue, we are likely to see grounds for appeal submitted due to misunderstandings which will, ultimately, have a greater impact on the deemed employer.

The fact that it is not retrospective has created the need for a two-tier system which accommodates zero tax payments for the worker (if they claim a refund) prior to 1st April 2024 and the set off mechanism post 1st April. This creates confusion for the supply chain and is likely to result in double taxation prior to the implementation of the set off mechanism.

The issue around data transfer and transparency across the supply chain also prevails. We believe that there needs to be a statutory obligation for information to be supplied prior to the start of an engagement to prevent individuals deliberately withholding information and ensure recruiters aren’t disadvantaged.