Industry experts don’t expect much from the government’s review and fear that it is going to be an exercise in futility. These concerns emerged when the HMRC published a technical comment for the secondary legislation of the off-payroll rules.
Susan Ball, who works as an employer solutions partner at the RSM, gave some valuable insights on this matter. She explained that despite the fact that businesses thought that the review would open the door to the more debatable elements of the rules, especially those for the transfer of debt provisions, the government responded quite differently. The recent publication has indicated the government is moving ahead resolutely.
Richard Harris, the Chief Legal Officer at Robert Walters Group, is not too happy because he believes that the government has been too late to launch the review. Harris explains that the government is coping with a fiasco due to the loan charge. In addition, the off-payroll rules need an improvement in the proposed rules because the current tests are used to classify the status of the worker is flawed. He said that “What’s going to happen is that we’ll tinker around the edges – probably do it around the CEST [government’s check employment status for tax tool] tests.”
Moreover, he announced to fight for the MOO (Mutuality of Obligation) point. He feels that this is an area where there is a large gap and the HMRC may face a lot of trouble in future when they get to address appeals. He also referenced the poor success rate of the HMRC in the tribunal for such cases.
Harris believes that one of the major reasons behind the failure of the CEST tool is its failure to answer questions pertaining to MOO—a key component of the IR35 tests. The court and tax tribunals use MOO to determine the status of a contractor.
Harris explained further that instead of focusing on MOO, the tool goes more into substitution. However, the substitution holds little value in the court and tribunal cases. Similarly, he said that even if anyone answers and gets a desired result via the tool, which is highly unlikely, there is a lot more to do. Users have to write the explanation for their answers. He concluded by saying that the performance of CEST is not that great; there are a lot of better alternatives out there.