New rules aimed at tackling false self employment through the use of employment intermediaries will not work but may result in an increase in cyber fraud, the ICAEW warns say Harris & Co accountants Northampton
Proposed legislation to tackle false self employment through onshore employment intermediaries will not work in the manner intended, and is likely to result in unintended consequences such as cyber fraud and price increases, according to analysis from the ICAEW.
The institute made the comments in its response to HMRC’s recent consultation on plans to tackle the use of employment intermediaries to avoid national insurance contributions (NICs) and income tax by falsely presenting employment relationships as self-employment.
ICAEW said that while it supported the principle of moving responsibility for paying PAYE down the chain towards the end users who are paying the workers, the proposals in the consultation document were ‘scattergun’ and reforms in this area were being introduced ‘piecemeal’.
It warned that the new measure were likely to push up costs, particularly in the construction sector which is a major user of umbrella companies and agencies for payment to workers.
ICAEW also said the proposals will require secure data systems put in place for sharing workers’ personal details, to prevent people hacking into emails between umbrella companies and agencies containing the data on workers, including national insurance numbers, needed to enable the agencies to complete returns for HMRC.
ICAEW says it believes the outcome of the current consultation should be a short term measure pending the development of a long term solution by way of a holistic review of the whole area of employment/self employment, personal service companies, IR35, managed service companies, umbrella companies and agencies.