IR35 changes

IR35

On 17 March 2020 the Government announced that it would delay (but not cancel) the IR35 changes in the private sector until April 2021. The delay is to reflect the challenging economic environment as a result of the coronavirus and means that the rules which exist in both the public sector and the private sector continue to apply up to and including 5 April 2021.

What does this mean?

1. If the client is a private sector client, it does not have to do anything at the moment.  Up to and including 5 April 2021 the personal service company (PSC) remains responsible for assessing IR35 and for making tax and national insurance deductions accordingly.

Agencies can continue to pay PSCs gross and will not be liable for their failure to comply with the IR35 unless (under existing legislation such as the Criminal Finance Act 2017) it can be shown that they are involved in the facilitation of tax evasion.

1. If the client is a public authority, the rules which took effect in April 2017 remain in place.
2. Status determination statements (SDS): We spoke with HMRC this morning (18.03.20) and asked them about SDSs which clients have already produced and agencies have acted upon: They advise:
3. SDSs which have already been made will have no standing so HMRC will not be interested in them. Contractors working in the private sector remain responsible for managing IR35 until April 2021. HMRC confirmed they will not consider any SDSs made if they open an investigation into a contractor in the meantime.  They will release a statement on this later.
4. Clients who decided to ban PSCs and require contractors to work via PAYE (whether agency or umbrella) need to decide whether to continue with that ban or to allow PSCs back. That is their decision.