The government announced yesterday that it would be launching a review of changes to off-payroll working rules, which are set to come into play from April this year. We still expect the reforms to go ahead so it is absolutely vital that contractors plan for these changes. Further details on the legislation will come through once the Budget is announced on 11th March - read more about that here

Treasury says that reform will not be postponed 

A published statement from the Treasury states that in addition to ensuring that self-employed workers who are not currently inside the scope of IR35 rules will not be impacted by the changes, the review "will determine if any further steps can be taken to ensure to smooth and successful implementation of the reforms, which are due to come into force in April 2020". 
 
Jesse Norman, Financial Secretary to the treasury, stated yesterday that despite the ever-growing concerns about draft legislation changes, "the purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible."  
 
The review is expected to end around mid-February, and it will in the meantime engage with those individuals and businesses who are affected to ask for their experiences of the implementation of the reforms. Stakeholders, including contractor groups and medium and large-sized businesses, will be invited to attend a series of roundtables in order for the government to understand how it can ensure smooth implementation of the reforms.  
 
Internal investigations will also be held including an evaluation of the enhanced Check Employment Status for Tax (CEST) tool and whether there are any further steps the government could take to support businesses in correctly determining employment status of their contractors. 
The full draft legislation can be found here

IR35 background: refresh your memory 

Off-payroll working rules (IR35) were introduced in the year 2000 to ensure that people who work as contractors through their own limited companies pay the same level of Income Tax and National Insurance Contributions as employees. Following a reform to the rules in April 2017, public-sector organisations who took on contractors became responsible for ensuring that both they and the workers they engage were paying the correct amount of tax, which has been an effective method of improving tax compliance. 
 
At the Autumn Budget in 2017, the government revealed its plans to start a similar plan for tackling non-compliance in the private sector. A year later, during the Autumn Budget in 2018, it was announced that plans for the reform would be extended to medium and large organisations, and the changes would kick in from April this year. 

Who will it impact? 

The changes are expected to impact around 170,000 individuals who currently work through their own limited company and would otherwise be employed if engaged directly by the client. To reiterate, if you are compliant you should feel minimal impact – but if you are non-compliant, you may feel some effect from the new rules, and it’s important to start acting now
 
Those who are non-compliant will be required to pay tax at the correct levels, and this will therefore lead to them facing additional tax liabilities. This could, in turn, lead to an impact on the amount of disposable income available to them – another reason why you should get in touch if you are in any way concerned that you may fall under this bracket. 

Get your IR35 Private Sector: 5-Step Action Pack now! 

Nicola and the team at Effective Accounting have been preparing for this for months. We are fully prepared to work with contractors to help you to understand the changes, navigate the complex world of IR35 and in your communications with your client.  
 
Make sure you're one step ahead and get your IR35 Private Sector: 5-Step Action Pack now. Learn more here
 
For just £297 + VAT, you will get: 
 
Full written IR35 Contract Review; 
30-minute debrief call with Nicola to discuss the outcome of the IR35 Contract Review and its impact on you and your limited company; 
Communications Pack including email and letter templates to send to your client to get your communications started, and in the event that you need to appeal; 
30-minute call to discuss your very own action plan. 
Be proactive, take the initiative and get planning for April 2020! 
 
 
 
Written by 
 
Nicola J Sorrell 
- Effective Accounting 
 
Founder | Xero Champion | IR35 Expert 
Tagged as: IR35, Legislation
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