IR35 Off-Payroll Reform – A Recap
As we find ourselves in another National lockdown, businesses may be questioning whether we will see another delay to the implementation of the IR35 Off-Payroll Working changes due to come in from April 2021. This however is wishful thinking as we hear the Government has pledged its commitment to introducing the rules as planned with Parliament having already passed the legislation.
IR35 Off-Payroll Working Reform – A recap and clarification on key points
As we are approaching the round-up of 2020, businesses should ensure that considering the IR35 Off-Payroll Working changes from April 2021 is high on the to do list for when we are all back in January. While April may still seem some time away, to ensure compliance with these changes, time should be spent sooner rather than later to implement appropriate processes and procedures for managing contractors going forward.
2020 Year in Review – Manpower & Recruitment Sector
Towards the back end of 2019 and as we entered 2020, the majority of UK manpower and recruitment (“MPR”) businesses were firmly focussed on ensuring their business models were Brexit ready. However, as 2020 unfolded, and the impact of COVID-19 shook the global economy, attention quickly turned to resilience, cash flow management and damage limitation to ensure survival and for businesses to come out of the other side of the pandemic.
IR35 off payroll working reform – education is key
As we edge closer to April 2021 when the private sector will be hit with new IR35 legislation, pushing responsibilities for contractor assessments and deduction of tax up the contractual chain, it is now time for businesses to dust off their IR35 plans from earlier this year for the original implementation date of April 2020.
IR35 Off-Payroll Working Reform – Full Steam Ahead…again!
With April 2021 creeping up on us, businesses in the private sector must ensure they are ready to face the delayed IR35 off-payroll working reform head on to ensure compliance with the legislation. This will mean taking the time now to implement robust processes and procedures for managing contractors going forward, including the completion of employment status assessments where required.
IR35 Off-Payroll Reform Delayed Until 6th April 2021
As one of the most controversial pieces of legislation affecting the flexible workforce, IR35 is never far from the headlines and there have been campaigns and protests to try and halt the reforms. That has now been successful as Contractors celebrated their success last night.
IR35 off-payroll reform – full steam ahead!
HMRC have this morning announced a fundamental change to the upcoming off-payroll reforms and formally published the updated guidance following their slip up earlier this week.
IR35 – Will the Government Listen?
As part of the review, the Government will be working with stakeholders representative of those affected by the reform, including contactor groups and medium and large sized businesses via a series of roundtables. The aim of the review is to identify and determine if any further steps can be taken to ensure the smooth and successful implementation of the off-payroll reform. In addition to the review, the Government is expected to carry out internal analysis, including re-evaluation of the enhanced Check Employment Status for Tax (CEST) tool as well as revisiting public sector bodies’ experience of implementing the reform to the off-payroll working rules in 2017.
It is anticipated that the review will be concluded by mid-February with the view that the off-payrolling changes will still be implemented in April 2020, following the scheduled UK Budget announcement on 11 March 2020. Although it is doubtful that the reform will be scrapped, it is possible that the review will take longer than anticipated and potentially the date of implementation could be postponed. However, this is not a certainty. Therefore, it is important that businesses continue to prepare for the off-payroll changes to be implemented in April 2020, ensuring compliance with the changing legislation.
What about IR35 and the Construction Industry Scheme?
Due to the temporary nature of projects in the construction industry, many construction companies use a large number of contractors. Those who pay subcontractors to deliver their construction work are already required to register and report under the Construction Industry Scheme “CIS”, which requires them to deduct a sum from their payments to their subcontractors and report on a monthly basis to HMRC. This is then paid over to HMRC as part of the subcontractor’s tax contributions.
The changes to the IR35 rules apply to medium and large sized private sector companies which will mean a large majority of construction companies will be required to apply these rules. Even though companies under CIS are deducting partial contributions towards the contractor’s liabilities, the IR35 reform effective April 2021 means they will need to be increasingly aware of the details of their contractors contracts as well as considering their working practices to determine if IR35 applies or now. Reviews of current contracting arrangements in place must begin immediately, as it is the end-user of the subcontractor’s services responsibility to determine whether their contractors fall inside or outside IR35. Engagements that are deemed inside IR35 and deductions required as a result will take precedence over the CIS rules.
For any further information on IR35 or the ongoing review, please contact Charlotte Edwards (firstname.lastname@example.org) or your usual AAB contact.
CEST – Changes for the Better?
HMRC have made almost 40 updates to their Check Employment Status for Tax (CEST) tool this month to make it ‘clearer, reduce user error and consider more detailed information’ by including and making changes to around 30 questions. HMRC have announced that they will uphold a result the tool provides; as long as the information input into the tool is accurate, and that it is the only tool they will do this for. Consequently, this has left many businesses thinking that they need to use CEST in order for HMRC to stand by the outcome.