Share with your friends

Off-payroll working from April 2020: what happens next?

Off-payroll working from April 2020: what happens next?

HMRC’s consultation on off-payroll working closed on 28 May – read our insights on what organisations should be doing now.


Also on

HMRC’s consultation on off-payroll working

HMRC’s most recent consultation on the off-payroll working rules from April 2020 (or ‘IR35’) invited views on how best to implement the proposed reforms from April 2020.

In particular, HMRC sought views on administrative aspects of the proposed reforms, such as the scope and impact on small non-corporate engagers, the practicalities around information exchanges and addressing disagreements on status determinations.

KPMG’s response

The key points from KPMG's consultation response are summarised below.

• Transfer of liability for PAYE/NIC – reasonable care defence

The consultation proposes that the liability for any unpaid PAYE/NIC should automatically transfer to the agency or party in the labour supply chain closest to the end client, and ultimately to the end client itself, in the event of default in the labour supply chain.  In our view, agencies and clients should be able to offer a defence of having taken reasonable care before any liability to account for PAYE/NIC transfers to them from a defaulting participant in the labour supply chain.

• HMRC guidance on status determinations

In our view, HMRC should provide specific guidance on what information should be provided by the end client to the worker as part of its IR35 status determination.  This information should be clear but succinct in order to keep the administrative burden to a minimum.

• Review of implementation

Where, as planned, the proposed reforms are implemented from 6 April 2020, we recommend that HMRC undertake a review of the new regime in mid-2022 to allow for improvements in light of the learnings from tax returns submitted following the first tax year of operation (2020/21).

In our experience, organisations want to design and implement systems and processes that are robust and ensure they will be compliant with the new regime.  However, it will only be possible for them to do so with certainty once the detailed requirements of the new regime, and HMRC’s expectations as to how these should be implemented, are known.

Equally, we consider that any major changes to the IR35 rules, the taxation of employed and self-employed workers and employment status for tax and rights purposes should be considered holistically.  Our view is that it would be preferable if broader ‘Good Work’ reforms proceeded before, or at least in tandem with, IR35 reform.

In our view, unless draft legislation, comprehensive HMRC guidance and an enhanced Check Employment Status for Tax (CEST) tool to support status determinations in the more complex private sector are made available in good time, the government should consider deferring the proposed reforms to allow businesses sufficient time to design and implement effective procedures and processes to comply.  In this respect we have a particular concern regarding the CEST and the modifications we think are needed to ensure it properly reflects recent case law and that the situations where it is unable to determine employment status is reduced below the current level of 15%.  Without these modifications we think there will inevitably be more disputes between businesses and contractors which will involve significant time and effort on the part of all parties, including HMRC and the courts, to resolve them.  

What happens next?

HMRC is currently analysing submissions to the consultation and will publish its responses in due course.

In the meantime, organisations should continue to work through the detail of HMRC’s current proposals and consider their practical impact.

HMRC suggest that organisations should identify and review their current arrangements with contractors’ personal service companies and agencies; review their contingent labour arrangements more generally; establish joined-up processes to arrive at consistent decisions on employment status; and review internal systems to determine what changes are needed prior to 6 April 2020, which remains the current ‘go live’ date for the new rules.

KPMG has developed its own data analytics offering to assist clients to identify and review those engagements likely to be at risk and impacted by the new rules.

Please contact Matthew Hunnybun, Colin Ben-Nathan, Anne-Marie Robinson or email if you’d like to discuss how KPMG can help your organisation can get ready for the new regime.

© 2021 KPMG LLP a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organisation please visit

Connect with us


Want to do business with KPMG?


loading image Request for proposal

Save, Curate and Share

Save what resonates, curate a library of information, and share content with your network of contacts.

Sign up today