The second development is that officers seem to be more reluctant than in the past to accept that the outcome of a status enquiry should be applied for the current year only, and not backdated. Clearly, where the position has been clear cut, employers who wilfully fail to recognise their obligations with regard to PAYE should be required to make a settlement which reflects their wrongdoing.
Employers who have genuinely tried to get the status of their workers correct, and have neither the experience nor the skills to make a fine judgement call should not be treated in the same way. Decisions about status are notoriously difficult, and unsophisticated employers should not be at significant financial risk if they have made an honest mistake.
The new Employment Status Indicator (ESI) Tool should be of help here….but is that entirely the case? The present version of the tool is not able to provide a conclusive, legally binding decision, but provides instead an indication of employment status. Although this leaves the smaller employer perhaps in no better position than without it, it is the best help that he has at present without engaging a status expert to advise him every time he engages someone.
It is hoped that the next version of the tool will provide a legally binding opinion, which can then be subject to appeal in the same way as a final ruling by a status officer. Might this be the answer to the problem? Should every business be advised to use the tool thereafter?
The problem, however, is not solved absolutely. Use of the tool relies on the correct responses being given to a number of questions, and if the engager is not careful he may misinterpret a question and give an incorrect response.
In this case, the outcome from the tool may be incorrect and the employer would not have the protection that the tool would normally afford. Replies given to questions are not retained after 7 days, so anyone wishing to rely on use of the tool should probably print each screen showing the reply in order to retain file copies for future reference.
Perhaps the final version of the tool could incorporate a summary screen to enable users to print a page showing the replies given? This would also enable a final check of the replies to be made, and for advisers to review the use of the tool and advise about potential incorrect responses.
Employment status is a difficult area, and seems to be increasingly producing significant settlements from employers. All in all, businesses would be forgiven for feeling as if this subject puts them “under siege” from the taxman!
