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Collaborative Procurement Board (CPB)
Date of meeting:
22nd February 2017
Title of paper:
IR35 Intermediaries Legislation Update
To be presented by:
Andrew Mayes – Lead Commercial Manager
Classification:
Public (with appendix reserved for reasons of
commercial sensitivity)
1
Executive Summary
1.1
This paper shares with the Board the current position of Transport for London (TfL)
regarding Non- Permanent Labour (NPL). This specifically concerns the changes to
legislation affecting NPL workers in the public sector, announced in the Government’s
Autumn Statement in November 2016, which come into effect on 1 April 2017.
2
Recommendation
2.1
That the Board notes the latest version of the TfL “Off Payroll Transition FAQ’s”
attached as Appendix A to the report, noting also that this is an internal TfL document,
is subject to change and may not represent TfL’s final position regarding the new rules.
3
Introduction and Background
3.1
In the Government’s 2016 Autumn Statement it was announced that HMRC was to
reform the rules regarding liability for ensuring payment of the correct tax and
National Insurance for public sector roles falling under intermediaries legislation
(IR35). TfL and other public sector bodies have been consulted on the new proposals
and have stated their concerns, which mainly centred on the need for a reasonable
transition period and, for TfL in particular, the potential detrimental effect the new
rules could have as it competes against the private sector for some of its key skill
requirements. HMRC will implement the rule changes from 1 April 2017
3.2
TfL has set up a steering group, including members from HR, Tax, Commercial and
Legal, to work through the options available.
3.3
As a result of the new regulations, the onus for paying the correct tax will move from
the temporary worker operating as a Personal Services Company (PSC) to the supplier
(the Agency) of the temporary worker to public sector bodies.
4
Objectives & Expected Outcomes
4.1
The attached FAQ’s are specific to TfL, but do cover the generic points that affect all of
the GLA Functional Bodies in respect of this issue. All Functional Bodies that utilise
NPL may need to make available a number of options to temporary workers. These
options (identified by TfL) are set out in Appendix 1.
5
Equality Comments
5.1
None at present. All policies and decisions will have due regard to the Public Sector
Equality Duty, taking account of the need to eliminate unlawful discrimination and
advance equality of opportunity amongst London’s diverse groups.
6
Key Risks and Issues
6.1
Potential risks and issues include, but are not limited to:

NPL are likely to pay more tax, unless they move to the private sector;

TfL’s suppliers will need to ensure compliance for the staff provided to us; and

Management of critical NPL staff members who wish to keep their PSC status. If
captured by IR35, TfL will not continue to engage with NPL who have PSC status.
If not captured by IR35, the PSC status is acceptable. The options TfL is
considering are:
- moving PSCs to PAYE and paying an extra 20% which includes the cost of
Employers NI, Pension and Apprentice Levy and a circa 4% up-lift to mitigate
other costs incurred by the conversion;
- Offering FTC or Perm or in certain areas (Projects); and
- moving to a Statement of Works provision.
7
Financial Comments
7.1
None at present.
8
Legal Comments
8.1
None at present.
9
Next steps
9.1
Review of the attached FAQs and reviews of individual Functional Body IR35
positions.
Appendices:
Appendix A - Off Payroll Transition FAQ’s (Reserved from publication)