corporate finance
Off-payroll working in the public sector New rules for how off-payroll labour is engaged by public authorities came into effect from April 6, 2017
The new rules affect individual workers who provide their personal services through an intermediary personal service company (PSC) to a public authority organisation. The definition of public authorities is wide reaching and includes government departments, local authorities, the NHS, universities, colleges, academies as well as companies controlled by public organisations.
Previously it was the responsibility of the individual worker to assess whether or not their services could be deemed to be employment, and whether PAYE and NIC should apply in their PSC under the intermediary rules.
Under the new rules, for all direct engagements between public authorities and PSCs, if the authority decides the engagement falls within the intermediaries legislation, income tax and NICs will need to be withheld by the public authority (as the “fee payer”) at source through the payroll, and relevant payments made to HMRC through RTI. The public authority will also need to account for employer’s NICs and any apprenticeship levy costs arising. If the engagement falls outside the legislation, the public authority can simply pay the PSC or intermediary gross.
Where a public authority engages a PSC worker through an intermediary agency, it will need to consider whether the intermediary legislation applies and notify the agency accordingly. The agency will then become the ‘fee payer’ and it must fulfil the tax and NIC withholding and reporting requirements.
The new rules affect all payments to a PSC (whether direct or through an intermediary agent) made on or after April 6, 2017, even if the services were provided prior to this.
HMRC has published an employment status online tool to help public authorities assess whether or not a worker should be deemed to be an employee. While this tool is a source of assistance in considering if the new rules apply, employment status is a notoriously difficult area of tax law and public authorities will have to exercise great care when using it. HMRC has set up an employment status intermediary’s team that will monitor compliance of these new rules.
What do public authorities therefore need to do?
• Ensure you have read the guidance available from HMRC and are familiar with
£14m loan from OakNorth for new hotel in Southwark
OakNorth – the bank for entrepreneurs, by entrepreneurs – has lent £14.4 million to Frogmore, the UK-focused, fully integrated real estate investment manager which has invested and sold over £6 billion of real estate since its founding in 1995.
The capital has been used to acquire a cleared site on Ufford Street, adjacent to the LeSoCo College, and submit planning permission to develop a hotel. The site is less than a 10-minute walk from both Waterloo and Southwark stations and is in close proximity to other popular attractions, including: The Young Vic, The Old Vic, The London Eye, The London Dungeon, Sea Life, Southbank Centre and the Royal Festival Hall, making it an ideal spot for tourists.
In addition to this, there are a number of Michelin star restaurants such as Gordon Ramsey’s Union Street and Mark Hix’s Hixter located nearby. While there are a number of hotel projects and schemes currently under construction in Southwark – Hilton’s Hampton, Marriott’s Autograph, and Park Plaza’s Art’otel – the area still has one of the lowest levels of hotel bedroom supply
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businessmag.co.uk
among key Central London boroughs. This is especially noticeable when compared to neighbouring Waterloo where a number of established hotel brands – Novotel, Ibis, Hilton, Holiday Inn Express, Park Plaza, Premier Inn and Travelodge – all have a presence.
Established in 1961, Frogmore has transacted over £6b of projects since 1995. Currently it owns assets such as: The Notting Hill Gate Estate, Stratford Shopping Centre, and Weston House in Holborn. Previously, Frogmore developed the South Place Hotel, an 80-bedroom boutique hotel with restaurant, brasserie and private dining facilities. The hotel is let to D&D Restaurants and was completed in 2012. Earlier this year, South Place Hotel was sold to Chinese Investors.
Commenting on the deal, Jo Allen, chief executive of Frogmore, said: “Southwark has been experiencing a shortage in hotel room supply for several years. In Kensington and Chelsea, there are three times as many hotel rooms. In Westminster, there are more than seven times. Our hope is that we
can secure planning permission to build a hotel here and help fill this gap with a new 275-bedroom hotel on the site.
“It was a pleasure working with OakNorth on this deal – we’re no strangers to securing debt finance for large-scale projects, but this experience was one of the simplest and most stress-free transactions we’ve concluded.”
Ben Barbanel, head of debt finance and Damien Hughes, property finance director at OakNorth Bank, commented: “Southwark’s regeneration in recent years has put this south London borough on the map and made it a prime location for homes; international tourism and business.
“We’re very proud to have been selected by Frogmore for this deal – the business has an incredibly strong track-record spanning more than five decades. Frogmore’s last project in the hotel space – the South Place Hotel – was a huge success and we have no doubt that this one will be too. We look forward to working with Frogmore on future projects and hopefully celebrating its planning permission approval very soon.”
THE BUSINESS MAGAZINE – THAMES VALLEY – JUNE 2017
how the new legislation applies, including the various elements of the employment status tests.
• Review all existing contracts for services with PSC’s and intermediary agencies.
• Identify those workers providing services through a PSC or intermediary to identify if any are affected by the new rules.
• Ensure your payroll systems and procedures are updated to deal with the engaging, withholding and reporting requirements.
• Ensure you have good communication channels with the PSC’s and agencies so you can communicate the outcome of any employment status reviews to them efficiently and clearly.
• Consider the cost implications for your organisation moving forward if affected by the new rules, including any impact on your liability for the apprenticeship level as a result of the increased payroll costs.
whitleystimpson.co.uk
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