IR35 ‘Off-payroll working rules’ – Delayed

Due to the coronavirus (COVID-19) crisis, IR35 reforms have been delayed for a year and will now not take effect until 6 April 2021. Government took this decision less than a week after the measures were confirmed in the 2020 Budget. Chief Treasury Secretary, Steve Barclay, confirmed that “the decision was ‘a deferral’, not a cancellation, and the government remains committed to reintroducing this policy”.

The off-payroll working measures where initially brought in for the public sector in 2017, but the new measures were set to extend the rules to the private sector. The government’s intention is to crack down further on contractors who have an engagement with the characteristics of an employment contract but operate via a personal service company (PSC). The responsibility for determining whether an engagement falls within the off-payroll rules will move from the worker’s PSC to the client (the business which requires the worker’s services). The party which pays the PSC (which may be the client, or an agency depending on the commercial arrangements) will then be required to operate PAYE and NICs as appropriate.

We believe that although this is a delay not a cancellation, it will give the private sector more time to prepare for the reform and it is up to the businesses and individual contractors to use this time wisely.

If you would like to learn more about the IR35 reforms, please read our previous blog that can be found here.

If you have any queries or would like to discuss the changes, please do not hesitate to contact us.

This publication has been prepared by RRL LLP. It is to be treated as a general guide only and is not intended to be a comprehensive statement of the law or represent specific tax advice. No liability is accepted for the opinions it contains, or for any errors or omissions. All rights reserved.