IR35 Changes Delayed Until April 2021
Update: As of 17 March 2020 the Chancellor, Rishi Sunak, has announced the IR35 reforms will be delayed for a year in response to COVID-19. The legislation is now expected to take effect on 6 April 2021, rather than 6 April 2020. Providing businesses with more time to prepare for the impending changes.
From April 2020 medium and large organisations in all sectors of the economy where to become responsible for assessing the employment status of individuals who work for them through their own limited company.
What were the upcoming IR35 changes?
According to the Association of Labour Providers, the reform would not introduce a new tax, or apply to the self-employed, who are outside of the scope of the existing rules. The off-payroll working rules, known as IR35, were previously introduced in 2000 to ensure that someone working like an employee, but through a company, pays similar levels of tax to other employees.
On 7th February 2020, HMRC published some minor changes to the off-payroll working rules, It is unclear how these changes will be addressed when the new rules are finally implemented. HMRC did announce the following:
- Businesses would not have to pay penalties for errors relating to off-payroll in the first year, except in cases of deliberate non-compliance.
- The rules would only apply to services carried out from 6 April 2020 onwards, now 2021.
- Information gained from changes to the rules would not be used to open new investigations into Personal Service Companies for previous tax years, unless there is reason to suspect fraud or criminal behaviour.
- A legal obligation will be placed on clients to respond to a request for information about their size from the labour provider or the worker.
- The legislation will be updated to address concerns raised over the rules as they apply to off-shore companies
What Happens Next?
It is your responsibility as a business to understand and prepare for changes to the off-payroll working rules (IR35) if you're an intermediary and your worker provides services to a client. You can do this by visiting the official Government website - https://www.gov.uk/guidance/april-2020-changes-to-off-payroll-working-for-intermediaries