The Government has published draft legislation on tax changes affecting private sector contractors from 6 April 2020.
The off-payroll working rules, also known as IR35, are aimed at preventing work that HMRC regards as "disguised employment".
IR35 was reformed in the public sector in April 2017, moving the responsibility to operate the rules from the individual offering services to the organisation or business engaging them.
The draft legislation, published as part of Finance Bill 2019/20, sets out how the same reforms will be extended to the private sector from 6 April 2020.
HMRC estimates around 170,000 individuals will be affected, and said there will be little impact for those complying with existing rules.
However, the Chartered Institute of Taxation (CIOT) is warning that HMRC's check employment status for tax (CEST) tool needs urgent improvement before next April.
The online tool is intended to help businesses and contractors determine the employment status of their engagement.
But the CIOT said the CEST tool does not include all the necessary criteria to reach an accurate decision.
Colin Ben-Nathan, chair of the employment taxes sub-committee at the CIOT, said:
"If businesses are to make the correct decisions on whether the off-payroll rules apply then the CEST tool will need to be significantly improved.
"It needs to take proper account of mutuality of obligation, multiple engagements, contractual benefits, and whether someone is in business on their own account.
"This is key because otherwise the lack of confidence in the CEST tool will increase disputes between businesses and contractors."
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