Well, are you sitting comfortably? Happy in the knowledge that the company with which you contract has indicated that you are clearly outside the scope of IR35? Or are you already one of those contractors who has been told that they will be most definitely inside IR35 and are currently mulling over what to do? Perhaps you are one of the quite considerable number who have been ditched by a big firm because everything is being brought in-house, thus, from the employer’s point of view, neatly removing the problem, even if it’s going to cost them in NI and all those other benefits that employees need. In the meantime, what it’s going to cost you is no longer their problem…
As we reported on 14th January, the government has set about to “gather information from affected individuals and businesses, with the government saying it aims to address any concerns about how the IR35 rules will be implemented,” and also issued a factsheet to help contractors understand what’s going on (if you missed our last blog you can see the factsheet here).
On Friday (7th Feb), the government issued an update, telling us that the rules will now apply only to payments made for services provided on or after 6 April 2020. Previously, the intention was that the new rules would have applied to any payments made on or after 6 April 2020, irrespective of when the services were performed. This change means companies will need to determine whether the rules apply for current contracts which they plan to continue beyond 6 April 2020. The full details of the government’s approach to employment status can be found here. Our understanding is that, in effect, the only change is for payments dates which would have fallen under the new rules even although the work had been carried out prior to 6 April. We have seen some arrangements proposed where processing of timesheets and subsequent payments would be altered to allow payment to be made on 5 April 2020. That will no longer be necessary.
Associations for contractors and the self-employed are damning this latest move with faint praise, noting that it’s of little comfort to those who have already been binned by organisations determined to bring the work in-house. However, there is no denying that it does provide a bit more clarity and that is to be welcomed.
In particular, as we noted in our last blog, it seems to remove the possibility, that anyone who has acted legally in the preceding period be subject to an enquiry, simply because the preceding period is no longer an issue. Although the Contractors’ Association states that this is what the announcement implies, we do not think that (at time of writing) HMRC has updated their statement that those working legally out with IR35 will not be subject to a retrospective review.
Whether there will be any further announcements prior to the overall result of the review being made public after 20thFebruary remains to be seen. One thing that is certain is that we – Be-IT and M&S Accountancy & Taxation – are pressing ahead with a major webinar, where we’ll update everyone on what the review brings, plus look ahead to what employers and candidates can do about it.
We’re expecting a large number to ‘attend.’ Once we firm up on the date and time we’ll let you all know and you can sign up for what should be a very interesting session. Keep an eye on our news page here and also on our social media platforms.
Stewart McKinnon, Director, M&S Accountancy and Taxation and Gareth Biggerstaff, CEO, Be-IT