The budget has come and gone and we now have confirmation that the Off Payroll Worker rules implemented across the Public Sector in April 2017 will be rolled out to the Private Sector in April 2020.
Whilst this shouldn’t come as a surprise, there are still a number of Contractors and Private Sector Clients who don’t fully understand the changes and what this will mean to them. IR35 was brought in in 1999 to catch disguised employees – those self-employed individuals that HMRC believes are using a PSC (Personal Service Company) as a vehicle in order to avoid paying appropriate Tax and NI contributions.
The main changes coming in to effect from April 2020 are that the responsibility for determining IR35 status will move from the Contractor to the end Client and that the fee payer (in many cases right now, the agency), will be responsible for ensuring the correct Tax and NI contributions are paid for anyone found to be inside IR35.
This is going to impact all Medium and Large companies and the vast majority of Contractors in one way or another but, above all, our message is don’t panic!
By listening to some of the advice given in the recent Consultation on the matter, the Chancellor has given us just under 18 months to devise appropriate and sensible ways to implement the changes to ensure that it is applied to the right individuals and not to everyone.
A lot of the detail is still to be clarified. Will a small company be determined be the definitions of the Companies Act? Will the CEST (Check Employment Status for Tax) tool be improved and be fit for purpose in time? Will HMRC recognise that MOO (Mutuality of Obligation) is not guaranteed simply because a contract exists? What will be the outcome of the Employment Status consultation?
Answers to these and many other questions will become clearer over 2019 and we will continue to work with our clients and candidates in order to ensure compliance in as pragmatic a way as possible and limit the disruption that these changes are likely to cause. If you would like to discuss this further please do not hesitate to get in touch with Charlie Wood on firstname.lastname@example.org.