IR35 CHANGES IN APRIL 2021 (AGAIN)
The IR35 changes in the private sector previously scheduled for April 2020, will go ahead on 6 April 2021
The Government has now published the Finance Act which contains the final text of the off-payroll rules. This confirms that the IR35 changes in the private sector previously scheduled for April 2020, will go ahead on 6 April 2021. From that date, the responsibility of managing IR35 moves away from personal service companies to clients and fee-payers, unless the client is exempt (clients who are small or who have no UK connection will be exempt from the changes). A UK connection includes a permanent establishment such as an office, branch or factory, or an oil or gas platform within UK waters. It would also include an agent who regularly works on behalf of the client. We mentioned previously that a client must confirm whether they are small or not, if asked. But interestingly, they do not have to respond to enquiries about whether they have a UK connection or not. To deal with this, we will include the relevant questions in our exempt company declaration form and our new contracts.
If a client is not exempt, it must provide a status determination statement to both the worker and the party it has a contract with. That statement must confirm if the engagement is ‘inside IR35’ (interestingly it doesn’t have to confirm if it is outside but again, we will cover this in our status declaration form and contracts). The client must put in place a status disagreement process and must respond to enquiries within 45 days – even if you make an enquiry before 6 April 2021, the clock only starts then.
With just 6 ½ months to go (and a further delay highly unlikely) businesses must prepare for the changes. That includes understanding what clients are affected, what roles are filled by PSCs, how clients will make their determinations, who is in the supply chain, what happens to pay and charge rates, how to report payments and what records to keep. To help you get ready we have just started our new series of virtual IR35 seminars. We are working on updated contracts and will release these shortly. We are also updating other written materials, including those for use with both clients and contractors. Please keep an eye on our IR35 updates.
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