On 1 July a final bid to scrap the Off Payroll Working Rules or to delay their implementation by a further 2 years was seen off in the House of Commons.
The Off Payroll Working Rules, due to come into force on 6 April 2021, would require medium and large end user clients who engage contractors via personal services companies to determine the contractors' employment status for tax purposes. End user clients would then be required to operate payroll, deducting tax from contractors' fees where the contractors are deemed to be employees of the end user client for tax purposes.
Although three potential amendments were tabled in the House of Commons only one proposal was voted on: Conservative MP David Davies had tabled an amendment calling for the legislation to be postponed by 2 years. This was seen as having the best chance of success but was rejected by a majority of 317 votes to 254.
The Finance Bill (which contains the Rules) will now move forwards for its Third Reading in the House of Commons and will return once more to the House of Lords (where it was so savagely criticised earlier in the year). However, these stages are largely ceremonial and therefore the Bill is bound to be passed into law very shortly.
Attentions will now turn to ensuring compliance with the Rules in time for the 6 April 2021 implementation date.
Dave Chaplin, director of The Stop The Off-Payroll Tax Campaign, said the market now needed to prepare for the changes, adding that with careful planning, firms had “nothing to fear” and could hire freelancers compliantly.