HM Revenue & Customs (HMRC) has announced that the changes to the Off-Payroll working rules – known as IR35 – in the private sector will not apply to work undertaken before 6 April 2020.
HMRC had said previously that the new rules, which transfer the responsibility for determining an individual’s tax status from contractors to end clients, would apply to all payments made from 6 April 2020, irrespective of when the work was carried out.
HMRC’s review and this new decision will provide a sense of relief to some contractors, as it means that the rules will not be applied retrospectively to previous work conducted before the 6 April 2020.
Many feared that work or projects that ended before the introduction of IR35 could be included within the Off-Payroll rules if the payments related to the work were made after 6 April, but this will no longer be the case.
It is now clear that any new projects or work that starts or continues beyond the 6 April 2020 in the private sector must abide by the IR35 rules where a person is deemed to be bound by them and so contractors should seek professional advice to ensure payments, tax and NICs are calculated correctly under the rules for work before and after April this year.
Given the complexity of the arrangements and this late change, it is critical that end clients and contractors are ready for the new rules as soon as possible.
For advice on the IR35 rules, please contact Victor – firstname.lastname@example.org