The government will be introducing important reforms to IR35 legislation from 6th April 2020. These changes will, among other things, move the responsibility for determining whether a contract is inside or outside of IR35 to the end-client, rather than the contractor.
What is IR35?
IR35 rules were first introduced in 2000 with the aim of ensuring that individuals who are working like employees but who operate via an intermediary (most commonly a Personal Service Company or ‘PSC’) pay the same tax and NICs as an employee.
HMRC have been concerned for some time about the increased number of PSC’s not being tax compliant. From 6 April 2017 responsibility for assessing the tax position on engagements with PSCs working in the public sector, shifted to the end-user or hirer. In October 2018, HMRC confirmed that the public sector rules
will be extended to the private sector. This means that, where engagements between the end-user and a PSC have the features of employment, the fee payer must account for tax and NIC.
Despite the re-elected government promising a review of IR35 our advice is for medium and large sized private sector firms (OR PSC contractors) to assume the reform will be introduced and continue with their preparations.
Supporting you through IR35
We are very aware that the upcoming changes to IR35 have the potential to cause considerable disruption to you personally if not managed appropriately. If you would like more information on how we can support you through these changes please do not hesitate to email me directly using IR35@handle.co.uk.
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