IR35 rule changes indicate it’s full steam ahead for off-payroll reforms
The changes announced today by HMRC to the operation of the off-payroll working rules suggest that it’s full steam ahead for the introduction of the new rules from 6 April 2020.
The rules, also known as IR35, will now apply only to payments made for services provided on or after 6 April 2020. Previously, the rules would have applied to any payments made on or after 6 April 2020, regardless of when the services were carried out. It means organisations will only need to determine whether the rules apply for contracts they plan to continue beyond 6 April 2020.
Commenting on the change, David Williams-Richardson, an employer solutions partner at RSM said:
‘Clearly, HMRC are listening to the concerns being raised by stakeholders. The changes announced today should, in theory, ease the burdens on businesses, recruitment agencies and contractors trying to comply with the new rules. However, they could also introduce new practical challenges for those who have prepared on the basis of the old rules.
‘Confusingly, the changes won’t apply to the public sector. Public sector bodies may now have to apply the additional obligations where the payment is made on or after 6 April 2020 even for work done prior to that time.
‘The real significance of today’s announcement is that it underlines the government’s commitment to pressing ahead with new off-payroll rules from 6 April 2020 – despite the pressure from some recruiters and others to defer their introduction.
‘The drip-feed of changes to the new rules also show that there are still lots of moving parts as we get closer to implementation. The newly announced probe by the House of Lords committee and the imminent results of the Government’s own review could both influence the outcome of the final legislation so businesses can’t afford to keep their eye off the ball.
‘Businesses and advisers also urgently need detailed HMRC guidance on how some of the more complex aspects of the rules will operate, for example, in relation to the contracted-out services exception or where there are international aspects. While HMRC have started to update their manuals, we still do not have this guidance and this certainly doesn’t help businesses and other organisations with their preparations.’
