IR35 review confirms government’s commitment
The government has today published its review into the implementation of the changes to the IR35 off-payroll working rules.
The review was launched on 7 January to address any concerns from businesses and affected individuals about how the reforms will be implemented.Off-payroll working rules, known as IR35, were introduced in 2000 to ensure that someone working like an employee, but through a company, pays similar taxes to other employees.
The reforms, announced in the 2018 Budget, are designed to tackle non-compliance with off-payroll working rules by making medium and large organisations in the private and third sectors responsible for determining the tax status of contractors.
Susan Ball, employer solutions partner at RSM said:
‘There has been some vigorous lobbying in favour of postponing the IR35 reforms but this review makes it explicitly clear that these will be introduced as planned on 6 April 2020.
‘As has been widely trailed in the press, there will be a soft landing initially, with a commitment that taxpayers will not have to pay penalties for errors relating to off-payroll in the first year.
‘HMRC has also reconfirmed its commitment that it will not to open new investigations into Personal Service Companies for tax years prior to 6 April 2020 if it receives new information resulting from changes to the rules, unless there is reason to suspect fraud or criminal behaviour.
‘There will also be a new legal obligation on contracting organisations to respond to a request for information about their size from an agency or worker. This might be useful to help every party to understand their position, but it is unhelpful to have new obligations introduced at the 11th hour. There will also be updates to the legislation to address confusion about how the rules apply to offshore companies.
‘However, all in all, there is little new in this review and those hoping for wholesale change will be disappointed. On the other hand, those organisations and individuals who have done the necessary prep work prior to the rules coming into force in April will be relieved that the goal posts haven’t moved.’
