It has been widely publicised that the new off-payroll working rules (otherwise known as IR35) are coming into force on 6 April 2020. These changes mean that employers will now have to assess whether a contractor, providing services through a personal service company, should be taxed as if they are an employee. This will not, however, give them employee status for other employment considerations.
Further to our previous update on status determination (which can be viewed here), HMRC has recently announced that the operation of the new tax rules will only apply to payments made for services provided on or after 6 April 2020. This will apply whether or not the services are provided by a new contractor, or an existing contractor. However, if services are provided wholly before 6 April, but payment is made on or after 6 April, the new rules will not apply.
This clarification has been issued by the government in response to businesses’ concerns about to which payments the rules should apply and from when. While it is a minor change, it is thought this clarification will give businesses more time to prepare for the new rules.
Meanwhile, there are still calls for the government to suspend the roll-out of the new IR35 rules completely, as businesses are ill-prepared for the changes. However, with less than two months to go until implementation, suspension seems less and less likely.
Please contact Dentons if your business requires specialist advice on the implementation of IR35.