HMRC have issued their new IR35 consultation for off payroll working. As contractor clients of Whitefield Tax will know, the chancellor announced in the last budget that the government proposes to extend the rules to the private sector from April 2020. The rules only apply to medium and large companies, so any contractors providing their services to small companies will not be affected by the rules. A small company is one which satisfied two or more of the following conditions:
Annual turnover not more than £10.2million
Balance Sheet total not more than £5.1million
Employees no more than 50
Under the rules, the responsibility for determining the IR35 status of each engagement will shift from the contractor to the engager (end user client). The engager will be expected to make a fair and informed decision. It is important to note that the conditions for IR35 to exist or otherwise have not changed. The only change is around who makes the decision. If your engagement is genuinely outside of IR35 before the new rules come into effect, it should remain outside even with the new rules being in place. Engagers must be encouraged to apply the rules fairly, and not take the safe route out of fear or lack of knowledge.
The government are seeking views on how the rules will work, as they want to ensure that the proposed processes are suitable for the private sector. In the end, the government will do whatever they want to do regardless, but it is important that those affected by the rules take this opportunity to express their views, adding to the views already expressed by UK industry heads, the accountancy profession, and even the House of Lords, who have recommended that the rules be deferred. The consultation closes at 11:45 pm on 28 May 2019, so do take this time to write to HMRC with your thoughts and concerns.
This can be done via post to:
Employment Status and Intermediaries Policy
Room 3C/15
100 Parliament Street
London
SW1A 2BQ
Or email to:
Offpayrollworking.intheprivatesectorconsultation@hmrc.gsi.gov.uk
The full consultation can be read at:
https://www.gov.uk/government/consultations/off-payroll-working-rules-from-april-2020