Yesterday I asked “had HMRC solved the AE off -payroll puzzle” and a great number of people have read and opined and generally agreed that they hadn’t – and they were right.
The Pensions Regulator, to its credit, has responded quickly to my request to use the HMRC tool to determine if a contractor is an employer ;
The tax laws and the AE legislation have similar concepts, but they are distinct. So, no, employers should not use HMRC’s tool to give them a definite answer, although it may be quite common to find that an individual deemed to be self employed would not be a worker for AE purposes (and vice versa).
To which the obvious is question is
“why are these definitions of employee and worker distinct and what can be done to create alignment?”
Now I know that I am touching sensitive issues and that a lot of IR35 workers will be shouting “shut the f*ck up!” but we are in the middle of a consultation on auto-enrolment, have a new regime for determining “off-payroll” in the public sector and now would be a very good time for some joined up government.
In case you want to know what tPR want you to do to assess whether your contractors are workers (for auto-enrolment purposes) – you should read this presentation and then
“make a reasonable judgement”.
Well I’ll be interested in feedback on the presentation; I don’t think it is reasonable for employers to have to take decisions as complex as this without a lot more help than the power point gives.
Would there be demand for an AE “off- payroll” modeller?
Here is a reply I gave to a civil servant recently
Well I wouldn’t build anything this side of the AE review – I hope that the issue of inclusion will be visited – perhaps you can pass on my feedback that whatever comes out of the review, employers should have a tool comparable to the tool public sector employers have.Personally I would favour alignment of public and private sector and that the IR35 issues were properly addressed now – but I know this is politically sensitive.So if we have to have two definitions – one for employee and one for worker, I think we need two modellers!I suspect that the Sun may be generating some demand with its latest campaign!!!
But – if we look at current practice – “NO! There is no demand”- and as nobody is including off-payroll contractors as AE workers, DWP should decide either to get tough on this, or back off on this, the current situation is ripe for class action lawyers to sue employers for back-dated AE contributions.That is not a good outcome for anyone.
That Sun article in full – https://www.thesun.co.uk/news/3313507/a-million-small-firms-warned-theyre-breaking-the-law-by-failing-to-offer-workplace-pensions-as-thousands-lose-out-on-savings/#comments