The government has confirmed that reforms to off-payroll working rules for the private sector will be implemented from 6 April 2020.
The introduction of the off-payroll rules, which are known as IR35 and have applied to the public sector since 2017, has been under review, a review which has now concluded with the findings that the proposed changes will go ahead alongside the implementation of measures to support affected businesses and individuals.
From 6 April 2020, the new tax rules will use the 2017 changes as a starting point for the extension to medium and large organisations in the private sector. These reforms will shift the responsibility for assessing employment status to medium and large organisations employing individuals.
HMRC said it will take a ‘light touch approach’ and businesses will not have to pay penalties for inaccuracies in the first year, except in cases of deliberate non-compliance.
The government will also introduce a legal obligation on organisations to respond to requested information about their size from the agency or worker, to make it clearer who is responsible for determining the worker’s tax status.
Commenting on the changes, Jesse Norman, Financial Secretary to the Treasury, said: ‘It is only right that the off-payroll rules are applied consistently across all sectors. Two people sitting side by side doing the same work for the same employer should be taxed in the same way.
‘Following a review, the government is announcing a package of measures to help individuals and businesses implement these changes smoothly.’
If you are an employer or a contractor, and you are seeking advice on the new IR35 rules within the private sector, please get in touch with our tax team.