HMRC : Prepare for changes to the off-payroll working rules (IR35)

[eazy]

Prepare for changes to the off-payroll working rules (IR35)
Prepare for changes to the off-payroll working rules (IR35) - GOV.UK

Find out how to prepare for changes to the off-payroll working rules from 6 April 2020.

From: HM Revenue & Customs

From April 2020 the rules for engaging individuals through personal service companies (PSCs) are changing. The responsibility for determining whether the off-payroll working rules apply will move to the organisation receiving an individual’s services.

This advice will help your organisation prepare before the changes come in.

How to prepare

1. Look at your current workforce (including those engaged through agencies and other intermediaries) to identify those individuals who are supplying their services through PSCs.
2. Determine if the off-payroll rules apply for any contracts that will extend beyond April 2020. You can use HMRC’s Check Employment Status for Tax service to do this.
3. Start talking to your contractors about whether the off-payroll rules apply to their role.
4. Put processes in place to determine if the off-payroll rules apply to future engagements. These might include who in your organisation should make a determination and how payments will be made to contractors within the off-payroll rules.

More information on the eligibility and details of the reform is in the consultation Off-payroll working rules from April 2020 on GOV.UK.

Published 15 April 2019

[JohntheBike]

Prepare for changes to the off-payroll working rules (IR35)
Prepare for changes to the off-payroll working rules (IR35) - GOV.UK

Find out how to prepare for changes to the off-payroll working rules from 6 April 2020.

From: HM Revenue & Customs

From April 2020 the rules for engaging individuals through personal service companies (PSCs) are changing. The responsibility for determining whether the off-payroll working rules apply will move to the organisation receiving an individual’s services.

This advice will help your organisation prepare before the changes come in.

How to prepare

1. Look at your current workforce (including those engaged through agencies and other intermediaries) to identify those individuals who are supplying their services through PSCs.
2. Determine if the off-payroll rules apply for any contracts that will extend beyond April 2020. You can use HMRC’s Check Employment Status for Tax service to do this.
3. Start talking to your contractors about whether the off-payroll rules apply to their role.
4. Put processes in place to determine if the off-payroll rules apply to future engagements. These might include who in your organisation should make a determination and how payments will be made to contractors within the off-payroll rules.

More information on the eligibility and details of the reform is in the consultation Off-payroll working rules from April 2020 on GOV.UK.

Published 15 April 2019

I don't work through a PSC, I use an Ltd. So am I exempt? If HMRC can direct me to where a PSC is defined in statute, I'll see if MyCo qualifies.

[BlueSharp]

Made it clear to my client as the last 18 months I and my working practice and contract review have put me outside of IR35, if they deem it to be an inside role I will have no choice but to terminate the contract. I have no issues going inside else where if that is how the land lies and the rate reflects the client stumping up the Employers NI they have been saving. Not much difference now between Corp tax + Div tax vs PAYE. Obviously expenses now need to be negotiated if staying away.

I believe HMRC will go retrospective in such situations where a contract was outside and then placed inside.

[JohntheBike]

Made it clear to my client as the last 18 months I and my working practice and contract review have put me outside of IR35, if they deem it to be an inside role I will have no choice but to terminate the contract. I have no issues going inside else where if that is how the land lies and the rate reflects the client stumping up the Employers NI they have been saving. Not much difference now between Corp tax + Div tax vs PAYE. Obviously expenses now need to be negotiated if staying away.

I believe HMRC will go retrospective in such situations where a contract was outside and then placed inside.

yes, I would agree. Their approach to the loan charge indicates this.

For the moment, I'm keeping quiet as I would like a renewal to the end of this year. However, in November, I'll be opening a dialogue as to the client's intentions. If I don't like what I hear, I'll be retiring at Christmas.

[SandyD]

Yes was reading this as well, if does go retrospective it will be a disaster !!

[JohntheBike]

Yes was reading this as well, if does go retrospective it will be a disaster !!

Yes, but I guess the mere hint that this might happen for anyone would be a very sobering issue for them. Accepting an inside contract, irrespective of the terms, could lead to major financial issues and would likely dissuade them from signing up to such a contract, even if they needed the income. Some might choose to be on the bench until they could find an outside contract.

However, I would say that the contract would have to change and this might be a limiting factor, i.e. that the new engagement didn't reflect any previous engagements as those would have had different contractual provisions. Not seen any professional opinion on this yet though.

[cojak]

Yes was reading this as well, if does go retrospective it will be a disaster !!

I'm going to do a webberg here, it will NOT be retrospective. HMRC have put the stake in the ground and announced it.

The fact that many contractors will be unaware or ignore that stake and carry on as normal, and then years down the line HMRC haul said contractors over the coals does not make it retrospective.

[JohntheBike]

I'm going to do a webberg here, it will NOT be retrospective. HMRC have put the stake in the ground and announced it.

The fact that many contractors will be unaware or ignore that stake and carry on as normal, and then years down the line HMRC haul said contractors over the coals does not make it retrospective.

HMRC have put the stake in the ground and announced it.

I do not believe them. You only have to see their approach to the loan charge issue to see this.

[BrilloPad]

HMRC have put the stake in the ground and announced it.

I do not believe them. You only have to see their approach to the loan charge issue to see this.

So far they have not been retrospective. That could still change.

[BlueSharp]

HMRC signals intent to NOT launch retrospective investigations, in wake of IR35 change | IPSE


The key bit is in section ‘9’:

‘The reform is not retrospective – as it has in the public sector HMRC will focus its efforts on ensuring businesses comply with the reform rather than focusing on historic cases.’
‘HMRC will not carry out targeted campaigns into previous years when individuals start paying employment taxes under IR35 for the first time following the reform and businesses’ decisions about whether their workers are within the rules will not automatically trigger an enquiry into earlier years.’


Yet QUDO's Andy Vessey, has claimed they already look at PAYE/Div tax changes:


Data mining and analysis by HMRC to detect IR35 non-compliance
Vessey highlights that the days of the random IR35 inspection by HMRC are over: “Once, local tax inspectors might open a certain number of random inspections on their patch into corporation tax, VAT or Pay As You Earn (PAYE) income tax, and these had the potential to catch contractors.

“Those days are long gone, because HMRC lacks the resources and there are much more efficient methods of targeting possible IR35 offenders now available. HMRC’s risk assessment is conducted at a regional and national level using hugely sophisticated software able to analyse all public sector databases and identify discrepancies.”

Vessey warns that contractors who have filed incorrect information or different types of tax paperwork that do not tally will almost certainly be flagged by the software for an inspector to review their file and make a decision on whether to have a HMRC inspector investigate their IR35 status. A contractor business with wildly fluctuating profits or expenses may also cause HMRC to look closer.