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IR35 (Off Payroll Working Rules)

IR35 (Off Payroll Working Rules)

January 21, 2020

The April 2020 off-payroll (IR35) changes to the private sector represent an important challenge to the contracting industry.

All the information we have included has been supplied by APSCo.

What is IR35?

The Chancellor announced at Budget on 29th October 2018 that the government will reform the off-payroll working rules (known as IR35) in the private sector. This follows consultation and the roll-out of reform in the public sector. Responsibility for operating the off-payroll working rules will move from individuals to the organisation, recruitment business or other third party contracting with and paying the contractor (the “fee-payer”). Small organisations are exempt. The new rules are scheduled to come into force in April 2020.

To find out more please click here

Off-payroll working – How has IR35 changed?

IR35 itself has not changed but the way it is administered has. Currently, in the private sector, the person providing services through their own PSC (Personal Service Company) is responsible for deciding if IR35 applies. As highlighted above, from April 2020 this responsibility for operating the off-payroll working rules will move from individual contractors to the end-client organisation, recruitment business or other third party engaging the contractor – referred to as the “fee-payer” in the draft legislation.

Are all clients affected by the IR35 reforms?

This change will only affect medium and large private sector organisations as there is a “small company” exemption, the definition of which is based on the Companies Act 2006 definition of a “small company”.

How will the off-payroll rules work in reality?

Prior to your contract start date, the end-employer must make an employment status decision on the role, using ‘reasonable care’.

They may use the official CEST tool or an expert third party. You should be presented with a status determination statement before starting work, which shows whether IR35 is deemed to apply to the contract or not.

What is CEST?

CEST stands for ‘Check Employment Status for Tax.’ It’s HMRC’s IR35 tool. More information about CEST can be found here.

For more information please contact CMD Recruitment or download our Guidance pack.

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