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Off-payroll working in the private sector reforms - the next steps

The story so far and the processes to be put in place before April 2020.

Caroline Harwood, Partner, Head of Share Plans and Reward Schemes
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HMRC believes the existing IR35 legislation "is not working effectively, and non-compliance is widespread". They estimate that only 10% of personal intermediaries that should apply the legislation actually do so. As a result, the government announced in the Autumn Budget 2018 that they will reform the off-payroll working rules (IR35) in the private sector. Under the new rules, the responsibility for operating the off-payroll working rules will move from individuals to the organisation, agency or other third party engaging the worker.

Broadly speaking, the reforms will require medium and large private sector businesses impacted to identify and review the employment status of all workers engaged through personal service intermediaries, including those workers provided via an agency or third party, and potentially treat them as a deemed employee for tax and NICs purposes from 6 April 2020.

What's next?

Importantly the steps involved in becoming compliant in this area are likely to mirror the 2017 reforms of off-payroll working in the public sector, and for many organisations these changes required sometime to implement.

Based on our experience, there are practical steps that you can take now with the knowledge that these new rules will take effect on 6 April 2020 and we will provide guidance on each of these over the next 12 months with you. 

See the steps so far and what you need to do next.

Right now, you should consider:

  • informing yourself of the proposed changes. Further guidance can be found here and here. HMRC’s guidance on their preparatory steps to compliance was published on 15 April 2019
  • identifying all off-payroll workers currently engaged by your organisation
  • determining your organisation’s risk appetite in this respect as this will inform your subsequent steps in order to meet the following timeline.
 payroll timeline

*View Off-payroll working rules from April 2020 consultation.

Contact us

Caroline Harwood
Caroline Harwood
Partner, Head of Share Schemes and Employment Tax