Association of Professional Staffing Companies (Global) Ltd – Written evidence (OPR0023)


Executive Summary:

Employment status law is complex and in a state of flux, reference the latest Court of Appeal case Professional Game Match Officials (PGMOL) v HMRC 2021 now remitted back to FTT.

OPW is exacerbating the effects of the current skills short, candidate led labour market, leading to higher job vacancies and wage inflation.

CEST remains an inappropriate tool for a complex legal assessment, leading to greater uncertainty which increases Engager caution.

Most Engagers remain uninformed or under educated on OPW and their statutory duties.

The rollout has led to heavy reliance on umbrella companies in the recruitment supply chain, concerning news given the inherent compliance risks HMRC are seeking to mitigate through the Finance Bill.

OPW has reduced flexibility, innovation, and productivity in the labour market. The supply chain is seeking to mitigate the impact through use of deliverables contracts and outsourced service.

1.Has the recent extension of the off payroll working rules to the private sector made it more difficult for engagers to hire people with the right skills and expertise? To what extent has its introduction contributed to job vacancies?

Our members in all sectors we support across the private sector; STEM, marketing and media, legal, finance and general professional, education, clinical and healthcare are reporting a very strong candidate led market which is indicative of skills shortages.  Our members have been talking of skills shortages for many years, certainly since the Brexit referendum, and the shortage has been exacerbated by immigration rule changes, OPW and Covid-19, rather than created by them. The fundamental issue as reported by members across all sectors is the mismatch between skills in the working population, particularly amongst new graduates, and the highly specialised STEM and technical qualifications required by employers. The government is seeking to address this deficit through its Plan for Jobs, but this is a long-term issue, which needs short and mid-term mitigation.

The recent change to off payroll working rules (OPW) in the private sector has certainly added complexity to the hiring process and has made it more difficult for engagers to hire people with the right skills and expertise. This is for several reasons reported to us by our members:

2.              For those engagers (and their advisers) who use the CEST (Check Employment for Tax Status) tool to assess employment status, how effective do you consider it to be? Do you have confidence in its results? If not, what further improvements need to be made to it?

3. What changes have engagers had to make to apply the off-payroll rules to contractors, in terms of systems, personnel and training? By reference to your own experience, to what extent (if any) do you consider that compliance costs have increased because of the changes?

4.How well has HMRC supported engagers, contractors, and their advisers with the implementation of the new rules and is any further or different type of assistance needed?

5. To what extent has the introduction of the new rules generated disputes between engagers and contractors concerning the status of contractors vis à vis the rules and how successfully or otherwise have these been resolved?

6.What behavioural effects have resulted from the introduction of the new rules in the private sector in terms of the arrangements adopted in hiring contractors?

7.The Government is proposing a new employment body with powers to enforce employment rights, including for those engaged by agencies and umbrella companies. How effective do you think such a body will be in ensuring workers, particularly the lower paid, are treated fairly?

8. How successful will the draft Finance Bill proposals for earlier publication of information about promoters and avoidance schemes be in protecting individuals from being drawn into such schemes?

One of our insurance Trusted Partner members states: “The power for HMRC to present a winding up petition against companies involved in the promotion of tax avoidance where it is against the public interest should deter all but the most determined minority. The naming and shaming of not only promoters of tax avoidance but also those associated with promoters through control and influence is also welcomed.”

15 November 2021