This is the first of our features about this subject and we will provide updates as the rules become clearer.
Since its introduction in 2000, this is probably the biggest change to impact those potentially affected by IR35. Here is a very short summary of the changes. We strongly recommend that you read on and seek professional advice if you think these changes will affect you.
From April 2020, large companies within the private sector – let’s call them ‘end clients’ will assume responsibility for determining status and whether to deduct PAYE and NIC from payments made to companies they engage.
The end client will be responsible for determining the status of all personal service company (PSC) and limited company contractors (collectively called ‘off-payroll’ workers) they engage.
All companies are required to implement the new rules except those defined as ‘small’ *.
The end client must consider evidence provided by the off-payroll worker and then provide a copy of the determination of status and the reasons leading up to it. If the off-payroll workers disagree with the determination, we understand there will be an opportunity to challenge and that a time limit of 45 days will apply.
In the event of non-compliance, HMRC will trace back along the supply chain to the point of non-compliance and seek payment from the party at that point. The supply chain often includes at least three parties – the end client, an agency, the PSC and the off-payroll worker.
If you think this may affect you, please get in touch with your usual Haines Watts contact to discuss further.
*Section 382 Companies Act 2006 definition:-
- Annual turnover not more than £10.2 million
- Balance sheet total not more than £5.1 million
- Number of employees not more than 50.
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