Government opens consultation on IR35

The Government has now launched its request for the proposals to introduce Off-Payroll working rules to the private sector, similar to those already in the Public sector. If you’re just getting to grips with IR35 you can get a summary here.

Amongst the information in the consultation were the following highlights:

  • The exemption for Small Businesses has been clarified as matching that detailed in the Companies Act 2006, i.e. companies which meet two or more of the following criteria:
  1. Turnover not more than £10.2 million
  2. Balance sheet total not more than 5.1 million
  3. Number of employees not more than 50
  • Clients are required to share information regarding the status decision, and each party in the chain is required to pass this along. This answers some fears that in long supply chains, clients could satisfy their obligations, but a failure to pass information on would lead to agencies and contractors being unaware of the status decision.
  • HMRC has set out the proposed ability to move liability throughout the supply chain, giving greater flexibility in pursuit and ensuring that the introduction of other parties in the chain does not prevent enforcement of the rules.
  • Listening to contractors’ concerns around a lack of appeal process, HMRC has suggested some form of disagreement process being in place.

It is clear from the consultation that the Government intends only to strengthen the provisions of the public sector rules and so it is critical for contractors and clients to talk to agency partners as soon as possible.

With respondents having until 28th May 2019 to provide feedback, we aren’t expecting the draft legislation until around September 2019. With potential impact of these changes, the risk for end hirers and the complexity of making changes, it is important clients and contractors take the opportunity to prepare for these changes now.

 

For more information on IR35 click here.

To see a timeline of IR35 and how it is changing, click here.

Jeni Howard

Compliance Manager

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