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The Government has confirmed that despite its plans to review the Off-Payroll tax rules, also known as IR35, it will not postpone the April 2020 implementation of the legislation in the private sector.
The introduction of IR35 to the sector is thought to be one of the most significant changes to the way that contractors and consultants are paid and taxed.
The rule change means that engagers (those who use the services of consultants and contractors), rather than workers, will be responsible for determining whether an engagement falls within the IR35 rules.
If an engagement is found to fall within the rules, the engager will be responsible for applying the correct tax and National Insurance contributions (NICs).
The change only affects all medium and large businesses, but it will be they and not the contractor held liable if HM Revenue & Customs determines a contractor’s IR35 status has been incorrectly assessed, which could result in significant costs.
It is understood that this latest review into this controversial change won’t significantly affect the proposed legislation, which is why the Government intends to roll it out still in April.
A Treasury spokesperson said:
“The review will determine if any further steps can be taken to ensure to a smooth and successful implementation of the reforms, which are due to come into force in April 2020.”
The review will also assess whether greater support can be offered to ensure that the self-employed outside of the scope of the rules aren’t affected, particularly as many have found themselves under blanket IR35 determinations under the current rules in the public sector.
Financial Secretary to the Treasury Jesse Norman stated: “We recognise that concerns have been raised about the forthcoming reforms to the Off-Payroll working rules. The purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible.”
It is important the businesses affected by the rules change seek advice to ensure they are compliant with the new requirements. To find out how we can help with IR35 and determining which workers are affected, please contact us.