FAQ - The April 2023 IR35 changes

[cojak]

Good idea. Thread closed.

[Lance]

Thanks for the work you put into this thread eek, but you are right. It's no longer applicable, so I've unstickied it.

Thread closed?

[cojak]

Thanks for the work you put into this thread eek, but you are right. It's no longer applicable, so I've unstickied it.

[rocktronAMP]

Spare post 2 for other questions

Hmm... Eek

What about company that was struck off with DS01? I struck off my January 2021
If I was to return to contracting 6th April 2023, what does it mean?

Context.

You can find more information on strike off in our Limited companies factsheet which can be found here: https://www.businessdebtline.org/EW/...edcompany.aspx

After three months you will need to complete form DS01, you can get this form from Companies house. This can be found here - https://www.gov.uk/government/public...-register-ds01. The DS01 must be returned to Companies House with a cheque or postal order for £10.

[eek]

spare 5

[eek]

spare 4

[eek]

spare 3

[eek]

Spare post 2 for other questions

[eek]

Can I resurrect my old company?

You can but it's really not worth the hassle. You can create a new one in 30 minutes at Companies house..

[eek]

I have an inside IR35 contract - what can I do?

Firstly it's worth remembering that your old client is unlikely to accept risk so don't gamble on being able to switch to outside with the same client.

After that it depends on how your end client has handled the past few years of IR35 and whether they have been issuing SDS determinations or been more sensible and operated a blanket ban on PSC*

If you have an SDS determination
if the contract is currently inside IR35 and you have a SDS saying that it's inside it will be after April because that's what the client thinks
Now you could argue that the reasons why the decision is incorrect are valid but it's going to be a hard argument to win with HMRC when the end client doesn't agree with you.

If you end client issued a blanket ban on PSCs
if the contract is inside because of a refusal to work with Personal Service Companies then it depends on how the end client wishes to play things.
They may feel that the ban should continue - in which case nothing will change.
They may feel they can allow Personal Service Companies to be used - in which case you will need to decide if your working practices make the contract inside or outside.

Will HMRC come calling
We don't know - when the 2017 and 2021 changes occurred HMRC were happy to state that they wouldn't treat a change from outside to inside as a reason to launch an investigation.

That promise hasn't been made as of yet and if your end client regards you as inside prior to April 6th 2023 it's very unlikely they will be able to provide evidence confirming that you are outside after April 5th 2023.

Our advice.
If your current contract is inside IR35 and you want an outside contract come 6th April 2023 - the safest approach is going to be to leave your current contract and find a new one...


* you can argue which approach was better elsewhere - however I suspect clients with blanket bans will be far happier come April than those who issued SDS determinations..

I'm starting a new contract before April 5th, what should I do?

short answer - pass. The existing Chapter 10 rules apply for all work done up to April 5th 2023 (even if it's invoiced and paid well after April 6th 2023) so you are still subject to your status being determined by the end client and after April 6th you are going to be in the same position as people looking at the answers above.

Given the choice of an inside IR35 with an SDS determination and an inside IR35 contract due to a ban on PSC's there is a chance that the company that banned PSCs may allow them again.

[eek]

I MVLed my old company - what can I do?

If you MVLed your company the TAAR rules are fairly simple, if you do not want the money your received to be treated as dividends you cannot start another company for 2 years.

But Note - that 2 year period starts not from the date you closed the company but from the date you received the final payments / disbursements from the company / liquidator.

The easiest way of explaining this is to use an example which I've created below where the company's money was disbursed in 2 installments.

1st 1/8/2021 £50,000
2nd 1/4/2022 £20,000

Now lets look at forthcoming dates and the situation at that moment in time..

Date	Amount where tax due	Reason
6/4/2023	£70,000	both disbursements within the 2 year window tax would be due on the £70,000 if you start now
2/8/2023	£20,000	Initial disbursement (1/8/2021) is now 2 years old - is in theory safe. Second disbursement is less than 2 years old - TAAR is still relevant Note HMRC may query this and go after the lot
2/4/2024	£0	2 years has past since the last disbursement (1/4/2022) So nothing to worry about you can start a new limited company.

Now if this was you - the above means you cannot really start a company in April 2023, you can at some cost and with some risk do so in August 2023 but can safely do so in April 2024.

It is up to you to decide what you should do but I would advise finding some proper tax advice...

[eek]

How will things work post April?

First things first - IR35 isn't disappearing.

What is changing is that things are reverting to how they were prior to the 2017 changes. Which means

1) You are responsible for the determination
2) You will need to have your contracts reviewed
3) You need to ensure your working practices keep yourself outside
4) You will need to ensure you have and keep evidence that the contract is outside IR35

However it does mean that you will once again be in control of your own business and will be able to take travel and subsistence expenses directly from the company before any tax is paid..

[eek]

What are the changes?

The announcement last Friday announced the removal of the 2017 and 2021 changes to IR35 and places the responsibility for the determination (and the tax) back with the contractor and away from the end client.

From The Growth Plan 2022 (HTML) - GOV.UK (www.gov.uk)

The 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) will be repealed from 6 April 2023. From this date, workers providing their services via an intermediary will once again be responsible for determining their employment status and paying the appropriate amount of tax and National Insurance contributions. This will free up time and money for businesses that engage contractors, that could be put towards other priorities. The reform also minimises the risk that genuinely self-employed workers are impacted by the underlying off-payroll rules.

This means that from April 6th 2023 Chapter 10 of the IR35 rules is revoked and we will return to the old Chapter 8 rules where it is up to the worker to determine the status of the contract.

Note however: the Chapter 10 rules will remain in place until April 5th 2023 and any work done up to that date (even if invoiced / paid well after April 6th 2023) is subject to the client determining the status.

[eek]

Given the number of questions we are getting regarding last Friday's surprise IR35 announcement I've been asked to put this thread together to place useful information in one place.

So far it covers the following.

• What are the Changes
• How will things work post April
• I MVLed my company what should I do
• I have an inside IR35 contract what are my options
• Other

Markel Tax have written a way better overview compared to what has been written else so I will link to it here
The Cover | Analysis: The repeal of the off-payroll working (IR35) legislation (the-cover.com)

If I've missed anything out please ask in the thread and I will add it. If you think I've got something wrong likewise ask in this thread and I will check. However I'm opinionated so be warned...