Changes to IR35 guidance

The new off-payroll working rules (IR35) will finally be coming into force from 6 April 2021. You can read more about these changes and what you need to do to prepare here.

To support medium and large private sector organisations through the changes, HMRC has published extensive guidance. It has subsequently amended that guidance to add some much needed clarity. The key clarifications are:

• If a worker does not have a material interest in a company, that company will not be a relevant intermediary for the purpose of IR35, except where limited exceptions apply.
• A client’s status determination statement (SDS) can be provided through an online portal.
• Contract extensions and changes to terms, conditions and working practices will trigger the need for a new SDS.
• A client will retain their obligations even if they subcontract the task of complying with the new regime.
• An explanation of how to deal with correcting payroll inaccuracies.
• Deemed employers cannot recover employer NICs from the amounts treated as employment income.
• Agreements which have a primary avoidance purpose will be caught by new targeted anti-avoidance rules.

This update serves as a timely reminder to medium and large businesses to ensure that they are prepared for the upcoming changes which will impact payments made to contractors on or after 6 April 2021, for services supplied on or after that date.