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HMRC announces change to IR35 rules for April 2020

Caroline Harwood, Partner, Head of Share Plans and Employment Tax
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HMRC have today announced a change in the way the new IR35 rules will work from 6 April 2020. 

Instead of applying the rules to all payments made from 6 April 2020 in respect of off-payroll workers who fall within the new rules, engagers will only have to apply IR35 where relevant services have been provided from that date. This means that contracts completed before then will now not be caught, somewhat reducing admin for engagers.

This is against the backdrop of the government review and a House of Lords committee inquiry into the extension of IR35 to the private sector that was launched this week. The Finance Bill Sub-Committee has made a deadline for submissions of written evidence for before 25 February 2020.

The inquiry will consider:

  • how the rules impact the public sector
  • whether or not the impact of the legislation has been properly assessed
  • what HMRC should do to help businesses understand the new rules
  • how the Check Employment status for tax (CEST) tool can be made more effective at its job.

Lord Forsyth of Drumlean, Chair of the Lords Financial Bill Sub-Committee, said:

“We are interested in how this change will work in practice, and how it relates to wider changes in working arrangements. To inform our work we want to hear from as broad a range of people and organisations as possible.”

If you have a view on off-payroll working rules, please let us know what you think.

To find out how you should prepare for the proposed changes to IR35, we have outlined the steps so far and the processes to be put in place before April 2020.

For more information on how Crowe can help, contact Caroline Harwood.

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