Embarrassing. HMRC Backs Down

Payroll Birmingham“If HMRC don’t understand their obligations under a system they’ve created, how can they expect businesses to get it right?” Says The Association of Independent Professionals and the Self-Employed (IPSE).

A contractor spent over a year working on marketing projects for HMRC as a freelancer. HMRC changed the terms of her contract, requiring her to go onto an agency payroll, a decision that she could not challenge. She then launched a claim to an Employment Tribunal against HMRC, Kinect Recruitment Ltd and three other parties in the contractual chain for unpaid holiday pay in the sum of £4,200 under the Agency Workers Regulations.

The parties settled the case in full for the full amount being claimed by the freelancer on the morning the tribunal was due to start.

The IPSE went on to say that “You can’t just decide someone is inside IR35, shunt them onto an agency payroll and expect someone further down the line to pick up the tab for your obligations like holiday pay.”

HMRC had run her engagement through the Check Employment Status for Tax (CEST) tool and had come to the conclusion that IR35 was applicable in her case.

The government are currently carrying out a consultation on putting these off-payroll changes into the private sector. Our professional body the Chartered Institute of Payroll Professionals has called on government to delay any changes until the CEST tool is fully tested.

Payroll Masters provides outsourced payroll management to a wide range of clients, including large public sector organisations. Please contact our Birmingham head office for more information.

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