Changes to the legislation may have a wide reaching effect
IR35 is legislation to combat off-payroll working for those whom HMRC deem to have the hallmarks of employment.
The Chancellor confirmed in the budget that its remit, already been introduced for the public sector, is to be extended to the private sector.
Under the changes, the responsibility for operating off-payroll working rules moves from individuals to the organisation or agency engaging the worker.
This is a key change for whom is left with the liability for any taxes that HMRC deem to be due.
Implementation for the private sector will be delayed until April 2020 and will only apply to large and medium sized businesses.
The changes will not affect small businesses for whom the responsibility for determining employment status and paying the appropriate tax and NICs will remain with personal service companies (PSCs).
Small businesses do not need to consider the employment status or deduct employment taxes from the fees of people they engage in this manner.
HMRC is looking at how the Check Employment Status for Tax (CEST) tool, along with wider guidance, can be improved.
The reform is not retrospective – as it was in the public sector and HMRC will focus its efforts on ensuring businesses comply with the reform rather than focusing on historic cases.
It is important that large and medium businesses prepare well in advance of the April 2020 deadline to ensure they are comfortable with their arrangements and compliance with the legislation.
These changes could have a significant impact on a number of the country’s smaller businesses so we are urging clients to stay on top of the legislation to avoid any issues further down the line.
If you would like any assistance with your employment status then please do not hesitate to contact our team.