John Feaster, LLB, CTA, TEP is taxation partner. He qualified as a tax lawyer with Eversheds LLP specialising…View Profile View all
Changes to the taxation of workers providing services through an intermediary (also known as ‘off-payroll working’ or ‘IR35’) are due to take effect from 6th April 2020.
Under current rules applicable to private sector organisations, the onus is on the intermediary, usually a personal service company (‘PSC’) to self-assess whether IR35 applies and if an individual worker is a ‘deemed employee’ for that purpose. From 6th April 2017, responsibility for assessing engagements with PSCs working in the public sector shifted to the public-sector end user.
Draft legislation was published by the Government on the 11th July 2019 confirming a further extension of IR35 reforms to large and medium sized businesses in the private sector with a start date of 6th April 2020.
There is some uncertainty whether the proposed changes will come into force in April 2020 due to the general election. At the time of press, the three main political parties have announced that they will review the Government’s planned extension of the IR35 legislation.
What you need to know
How can we help?
All arrangements with individual contractors should now be reviewed.
In addition to determining whether PAYE and NIC obligations will arise from 6 April 2020, consideration must be given to changing existing arrangements with contractors, i.e. engaging contractors as employees or ending contracts early.
The basis on which the IR35 rules are determined is a legal test, which if met deems an individual for tax purposes to be treated as an employee and this impacts on HR and payroll processes.
To discuss this article, or for further advice, please contact the Tax & Private Client team on 01274 350 800 or email firstname.lastname@example.org