New Draft IR35 Legislation Published

[rogerfederer]

Draft secondary legislation: off-payroll working rules from April 2020 - GOV.UK

Draft legislation covering the changes has been published today for feedback.

[krytonsheep]

These draft regulations also amend the PAYE regulations to
provide for the reporting of an off-payroll worker indicator on PAYE Real Time
Information (RTI) returns.

I think that means every month HMRC will know exactly how many outside IR35 contractors a client is using and who they are?

[jamesbrown]

I think that means every month HMRC will know exactly how many outside IR35 contractors a client is using and who they are?

14AA. If applicable, an indication that the payment to which the return relates is a payment in respect of an engagement to which Chapter 10, Part 2 of ITEPA applies by virtue of section 61M(1) of that Act.”.

61M(1) of the Bill identifies the scenario where a contract is inside.

61M Engagements to which Chapter applies

(1)Sections 61N to 61R apply where—

(a)an individual (“the worker”) personally performs, or is under an obligation personally to perform, services for another person (“the client”),

(b)the client is a public authority,

(c)the services are provided not under a contract directly between the client and the worker but under arrangements involving a third party (“the intermediary”), and

(d)the circumstances are such that—

(i)if the services were provided under a contract directly between the client and the worker, the worker would be regarded for income tax purposes as an employee of the client or the holder of an office under the client, or

(ii)the worker is an office-holder who holds that office under the client and the services relate to the office.

[ladymuck]

I don't think 61M is new. That's pretty much what the legislation is all about.

The new bit was about who they go after to recover PAYE and NIC.

[jamesbrown]

I don't think 61M is new. That's pretty much what the legislation is all about.

The new bit was about who they go after to recover PAYE and NIC.

No, 61(M) is not new. The additional reporting indicator under 14AA on the RTI return is new (an addition to the PAYE regulations) and that indicator relates to 61M(1) of 10(2), repeated above for clarity about what 61M(1) deals with, namely where the contract is "caught" by 10(2). In other words, I don't think that reporting requirement is for fee payers to report payments in relation to "outside" contracts, rather where the fee payer is making a deemed payment.

[JohntheBike]

I think that means every month HMRC will know exactly how many outside IR35 contractors a client is using and who they are?

Not sure I understand this. The RTI submission for MyCo is made by my accountants and this info clearly wouldn't show any links to the client. So can someone explain what this means?

[DaveB]

Not sure I understand this. The RTI submission for MyCo is made by my accountants and this info clearly wouldn't show any links to the client. So can someone explain what this means?

It's not aimed at you, it's aimed at the fee payers so HMRC have some figures to wave in triumph about the number of "disguised employees" they've forced onto PAYE.

[JohntheBike]

It's not aimed at you, it's aimed at the fee payers so HMRC have some figures to wave in triumph about the number of "disguised employees" they've forced onto PAYE.

I guess an upsurge in RTI submissions from agencies/clients would give HMRC that perception, but there would be an equivalent downturn in submissions from accountants. Whatever, HMRC will spin it as they please.

[WordIsBond]

No time today to read in detail but has anyone looked at whether the part about "no realistic prospect of recovery" can be used to transfer liability from foreign clients to the PSC?

Because they certainly have no realistic prospect of recovering payments from my current clients....

[jamesbrown]

No time today to read in detail but has anyone looked at whether the part about "no realistic prospect of recovery" can be used to transfer liability from foreign clients to the PSC?

Because they certainly have no realistic prospect of recovering payments from my current clients....

I think this needs a close read. My quick scan last night suggested recovery from the fee payer first, then the next highest in the chain that isn’t the client. It didn’t seem like the two ends of the chain were within scope. But, again, it needs a close read, ideally by an expert (not me).