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However, in its response to the Government's consultation on the controversial proposals for freelancer or 'off-payroll workers', the OTS said that it has concerns that it will not deliver simplification.
It says that aspects of the proposals introduce additional complexity, for example:
- the need to request information to help determine status, which will add administration;
- the status test results may not be binding, and so lack certainty;
- there are possible boundary issues and market distortions between private and public sector.
The Government's consultation also mentions the use of a new digital tool, along the lines of an enhanced Employment Status Indicator, which had [previously been suggested by OTS. While the OTS supported the idea it cautions that:
such a tool will only deliver simplification if there are clear rules and procedures around gaining certainty for the outcome;
it will naturally need testing in practice but that testing should consider whether, as the OTS suggested, it might be better to have two versions of the ESI to cater for differing situations/businesses;
the tool will also need to be kept up to date.
The Government proposals placed an additional burden on agencies, end clients in the public sector or other third parties engaged in hiring 'personal service companies' to determine their employment and therefore tax status.
There has been widespread criticism of the proposals.
The OTS response can be viewed here.
HMRC's public consultation: 'Off-payroll working in the public sector: reform of the intermediaries legislation' .
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Susie Hughes © Shout99 2016
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