Has HMRC solved the off-payroll AE puzzle?


One of the big auto-enrolment issues for employers is deciding who it is that works for them (and who is just an occasional contractor). The issue is generally put in the too-hard box – a dangerous thing to do in an age of class-actions.

There may be a large number of workers that have a case for a personal contribution from you – the employer – who you have quite ignored (as eligible jobholders for a workplace pension contribution).

So far, the only guidance we’ve been getting from the Pensions Regulator is the “is he looks, smells and acts like a worker, he’s a worker” line. Which is hardly the most scientific of tests.

Help on its way?

But now HMRC has given those employers in the public sector some help in determining who they should be employing and who they simply contract services from. This is a part of a move from April 2017 to be clearer on the issue.

HMRC have issues a link to a modeller which allows you to test a contractor to see if he/she should actually be treated as an employee. Here’s the link


I have written to the Pensions Regulator asking whether this bit of kit might be used (or adapted) to allow us to tell our contractors from our workers for auto-enrolment purposes.

In the meantime, I’d be interested in feedback from payroll professionals and legal experts as to their thoughts on the suitability of the “check for employment” modeller.

HMRC issue the usual warning that they will stand by the modeller’s results but may insist that an audit of the answers given be conducted to ensure that “crap-in ; crap-out” doesn’t apply.


Check employment status for tax


For those interested in the new service, here are some useful details (thanks to CIPP); https://www.cipp.org.uk/news-publications/news/new-employment-status-service-now-live.html

The new Employment Status Service enables you to check employment status for tax purposes and has replaced the Employment Status Indicator.


With the reform to off-payroll working in the public sector coming into effect in April 2017, HMRC has produced the new ‘Check employment status for tax’ tool.

This is to be used to find out if you, or a worker on a specific engagement, should be classed as employed or self-employed for tax purposes.


This service will give you the view of HMRC on whether:


HMRC will stand by the result given unless a compliance check finds the information provided isn’t accurate.


This service can be used for current or future engagements in the private or public sector. You should reassess the status of the role if there are changes to the engagement or the way the work is done.

This service is anonymous and won’t store any information you enter or the result given. You’ll be able to print your result for your own records.

Follow this link for full details and access to the Check employment status for tax tool.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Has HMRC solved the off-payroll AE puzzle?

  1. anonukhr says:

    Sadly I think this tool isn’t really helping Henry. Firstly it isn’t really “to help the Public Sector decide who they should be employing and who they simply contract services from” as you put it – but just to determine how much tax is getting paid.

    The tool is just to see if HMRC thinks IR35 applies – but saying IR35 applies (or doesn’t) doesn’t confer any workers rights such as paid holiday, sickness (pension?)etc – HMRC don’t care about that stuff as it’s not their department.

    Just for fun I ran a couple of actual scenarios from my past as a contractor operating via my own limited company (no longer operational as I am back being an employee these days). In one case the tool judged I was outside IR35 and could (and should) make my own tax arrangements – so far, so good.
    In the other, the tool said (I am not making this up) that it couldn’t decide after I answered 15 questions “Unable to determine the tax status of this engagement” it said, and invited me to phone to tell them more.

    In any case, a person working as a contractor inside or outside IR35 may or may not be subject to AE and may not in fact be an employee of any company.

    The whole system is a mess in my humble opinion but due to common practises in particular industries (Construction, Dentistry, Hairdressing and IT just for a few examples) it is hard to reform without being unfair to someone.

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