people at desk

HMRC releases new factsheet on IR35 rules

Caroline Harwood, Partner, Head of Share Plans and Employment Tax
people at desk

HMRC have released a factsheet explaining the implications of the proposed changes to the IR35 regime for contractors.

From April 6, the responsibility for operating the off-payroll working rules will move from an individual’s personal service company to the organisation, agency or other third party engaging the worker through an intermediary.

The reforms mean that affected businesses will be required 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.

On 13 January 2020, HMRC updated its guidance on the IR35 rule changes with a new factsheet outlining the changes for workers impacted by these rules. We’ve outlined below the key points from the factsheet that such contractors need to be aware of.

Key points

  • If the new rules apply payments will be made net of PAYE and National Insurance by the fee payer but that this does not mean that the contractor will be eligible for employment rights
  • The contractor can request a status determination statement (SDS)
  • If the contractor disagrees with the SDS they can dispute it and the engager is required to respond within 45 days of the date they receive the contractor's letter.

Importantly, HMRC have confirmed that they will not use information which suggests that payment should have been subject to PAYE or NIC to open a new enquiry into earlier years unless they suspect fraud or criminal behaviour. This is a further indication that the Government's review of IR35 is unlikely to result in a deferral of or significant change in the rules.

For more information on this complex area of tax legislation speak to your normal contact at Crowe or contact Caroline Harwood.

Crowe can help with the changes to IR35

Find out how you should prepare for the proposed changes to IR35.
Crowe will be able to assist in helping organisations review their engagements with off-payroll workers, by producing detailed employment status reports which help minimise risk where the position is not clear.

Contact us

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