The mini-Budget last week provided some unexpected announcements, one of which being the Chancellor’s decision to repeal off-payroll rules. Following a review of the statement, this does not actually mean the end for IR35.
It appears clear that IR35 will continue to exist from 6 April 2023 onwards, although the legislation will have to be revised slightly to remove reference to the off-payroll rules. PM+M tax manager, Julie Walsh, explains how the changes will affect you in our latest blog…
What has changed?
Large and medium-sized companies, and public sector employers, will have no responsibility to decide the status of any intermediaries with which they engage, providing simplification for companies who have previously spent considerable time creating systems to deal with the changes.
The proposed abolition of off-payroll working merely reimposes the risk of IR35 rules on the contractor and their personal service company.
Status Determination Statements (SDS)
We are not quite back to the IR35 position before off-payroll working was introduced, as over recent years, engagers have been issuing numerous Status Determination Statements (SDS).
The SDS records the decision that the worker is either caught by the IR35 rules, and therefore should be taxed as an employee, or is not. Certain large businesses have made blanket decisions for whole classes of workers, and in many circumstances, those workers did not feel confident in challenging the SDS.
Where an SDS exists that states the contractor is caught by IR35, it is going to be difficult for the involved parties to reverse that conclusion on 6 April 2023.
HMRC will still be conducting enquiries into personal service companies and their engagers, both under the off-payroll rules (for periods from 2017 to 2023), and under the IR35 rules for periods before 6 April 2021 and after 5 April 2023.
Get in touch
If you would like to discuss the proposed changes to IR35, the repeal of the off-payroll rules and/or how this may affect you or your business, get in touch with Julie Walsh by clicking the button below.