What will change from April 2021?

From 6 April, all public sector authorities and medium and large-sized businesses in the private sector will be responsible for deciding whether IR35 rules apply.

If a contractor provides services to a small private sector client, the worker’s intermediary will be responsible for deciding if the rules apply.

The Treasury conducted a review into the IR35 rules in March 2020, announcing several changes that it hoped would help individuals and businesses prepare.

These included:

Having a ‘light touch’ approach to enforcement: during the first year of the rollout, HMRC has been told not to place penalties on anyone with inaccuracies relating to the IR35 rules, but anyone who deliberately fails to comply can be charged.

Not using information for new investigations: HMRC won’t use any information submitted as a result of the changes to launch new investigations into PSCs for the tax years before 6 April 2021, unless there’s a reason to suspect fraud or criminal behaviour.

Making clients legally obligated to supply information: The government will place a legal obligation on clients that means they must respond to requests for information about their size from agencies or workers, so they can gauge whether they’re dealing with a medium or large-sized organisation.

Rules only apply to services from 6 April 2021: The IR35 changes will only apply to work carried out on or after 6 April 2021.

Who could be affected by the off-payroll working rules?

Many contractors offer work to clients by setting up a PSC. The client hires the PSC, which in turn pays the contractor. In many cases, this is a perfectly legitimate way of working, but HMRC has identified thousands of workers and companies who it thinks should be paying the same rate of tax as employees.

There are three main groups that are likely to be affected by the IR35 rollout in the private sector:

Up to 170,000 individuals who are supplying services through an intermediary, such as a PSC, without which they would be fully employed

Up to 60,000 medium and large private-sector organisations (with 50 or more employees), which hire workers via PSCs

Around 20,000 recruitment agencies and other intermediaries which supply staff through PSCs.

You can find a range of resources on gov.uk with more details on how the IR35 rollout will work

Uniting People are a specialist in Technology Contract Recruitment and supply to many of the UK's largest organisations.

If you require any assistance meeting your obligations please make contact: [email protected]

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