The planned changes to the operation of the off-payroll working rules (often referred to as IR35), will now apply only to payments made for services provided on or after 6 April 2020. This has been announced by HMRC ahead of the publication of the government’s review, which is due to be concluded this month.
The review, which was announced In January 2020, is considering if any further steps can be taken to ensure the smooth and successful implementation of the April 2020 reforms. The changes to the off-payroll working rules, which will affect medium and large organisations are still intended to be implemented in April this year. The government is also launching a separate review to explore how it can better support the self-employed.
Any medium or large organisations with existing contracts that they plan to continue beyond 6 April 2020 will need to consider if these rules apply. Likewise, for new contracts from 6 April 2020, these organisations will also have to consider the impact of these rules.
These reforms shift responsibility for operating the rules to the organisation that engages with the worker. They are designed to tackle non-compliance with off-payroll working rules by making these organisations responsible for determining the tax status of their contractors.
What does IR35 mean for me?
We previously provided an update of IR35 in November 2019, you can find out more about how it will impact organisations here.
IR35 rules are complex and if organisations get them wrong, they risk taking on their contractors’ tax liability, which can be significant, in addition to fines.
Many organisations, who do not understand the rules, or are simply afraid of them are scrapping contractors completely, losing an important pool of talent and resources. Others are keeping contractors, only if they agree to work inside IR35 rules, paying a higher rate of tax, but not necessarily with the benefits employment brings.
Professional advice will ensure that you are protected and are able to continue employing the contractors you wish, without falling foul of these rules.
How we can help you
Our expert team can provide detailed IR35 training and reviews, to assist in planning for these important changes, these include:
- A detailed explanation of the legislation and how this will impact you
- Provision of an action programme and timetable
- Providing judgement on how this will apply to your business and its impact to you
- Assistance to review existing contracts and to asses both working practices and written contracts to determine if current IR35 statuses are correct
- Assistance to ensure you are covered in the event of an investigation