Off payroll-working: Employment Status Service tool now available

Last month, I reported (here) that HMRC was due to publish an Employment Status Service tool for assessing if a worker should be classed as employed or self-employed for tax purposes. This tool is now live and available here.

By way of reminder, this relates to changes being made to off-payroll working from 6 April 2017, under which public authorities will become responsible for deciding if intermediaries legislation applies and for accounting for any tax due. The Employment Status Service tool allows users to answer questions about the relationship between the worker and the organisation with which they are connected. HMRC will then give a view on whether the intermediaries legislation applies. Significantly, HMRC has confirmed that it will stand by the results of the Employment Status Service tool unless it is found that organisations have not answered questions accurately (and it goes without saying that organisations should ensure their answers best match the reality of the engagement).

Use of the Service tool is optional. However, given HMRC's guarantee to stand by the results, public authorities are well advised to use it. We recommend that organisations start using the tool now to review existing relationships and ensure they are prepared for the change when it comes into effect on 6 April. Since results aren't saved, a copy should be printed out and kept with the relevant intermediary's file as evidence of HMRC's position.

Remember, this tool is aimed at determining employment status purely from a tax point of view. What is doesn't address is the thorny issue of "worker" status in the broader employment context. However, if HMRC's view is that the intermediaries legislation is applicable to an engagement, organisations should treat that as a red flag that worker (or potentially even employment) status may also apply.