The review in to IR35 has already led to a change in the legislation, the Government has announced the rules will not apply to contractors who carried out jobs before the 6th April but have not been paid yet, as previously it would have affected such workers.
HM Revenue and Customs (HMRC) made this statement on 07/02/20 after the review of IR35 was launched one month prior.
This change has been made in response to what HMRC has heard during its review, such as “concerns over what payments the rules apply to and from when.”
The Government feels this change will give “businesses certainty and more time to prepare to ensure the smooth and successful implementation of the reforms that come into force in April.”
Seb Maley, CEO of Qdos, who offer insurance and tax advice for the self-employed said:
The reform was due to apply to payments made on or after 6th April, which would take into account work completed in March. The Government has now changed its mind at the eleventh hour so that changes will apply to payments made for work carried out on or after this date.
The Government claims it is taking ‘early action’, but with less than two months to go until the reform arrives, this is a last-minute change that could easily confuse businesses further – albeit a tweak to the rules that gives agencies and end-clients a few extra weeks to prepare.
Most businesses impacted by reform have spent time and money making arrangements to take into account the original rules. Nonetheless, our advice to agencies and end-clients is to use this time wisely – communicate with the contractors you place and conduct well-informed and case-by-case IR35 assessments.
David Williams-Richardson, an employer solutions partner at RSM, a provider of audit, tax and consulting services takes a more optimistic view of this announcement.
Mr Williams-Richardson said:
Clearly, HMRC are listening to the concerns being raised by stakeholders. The changes announced should, in theory, ease the burdens on businesses, recruitment agencies and contractors trying to comply with the new rules. However, they could also introduce new practical challenges for those who have prepared on the basis of the old rules.
The real significance of the announcement is that it underlines the Government’s commitment to pressing ahead with new off-payroll rules from 6 April 2020 – despite the pressure from some recruiters and others to defer their introduction.
The drip-feed of changes to the new rules also show that there are still lots of moving parts as we get closer to implementation.