Contractors opting for PAYE ahead of IR35 reforms to private sector

13 November 2019

Accountancy Age reports that a number of accountants have confirmed that their services are no longer required by some private sector clients, who are choosing to go PAYE ahead of the April 2020 IR35 reforms.

The CIPP has reported extensively on the rollout of off payroll working rules that currently operate in the public sector to the private sector in cases where the engaging company is not deemed as being ‘small’. There are no concrete figures relating to the number of contractors who will proceed under PAYE as a result of these reforms but the fact that large banking groups, such as Lloyds, have confirmed that they will not employ contractors in the future provides an insight into how many contractors this could potentially affect.

There are many who oppose the new reforms and thousands of people have backed campaigns calling for the extension of IR35 rules to be stopped. Anthony Sherick, from Contractor UK commented “The Government, now more than ever, need to endorse and encourage the use of flexible working and developing niche skills in the economy. An immediate halt to the new rules in the private and public sector would be a great help.”

There are still many questions circulating regarding the issue of off payroll working reforms. Many professional bodies and individuals who will be affected by the changes assert that HMRC needs to publish guidance that is significantly clearer and more concise. This guidance needs to be universally accessible, understandable and free from complex jargon.

There have been numerous recommendations for HMRC to amend the Check Employment Status for Tax (CEST) tool, and to include a question that addresses mutuality of obligation, which does not currently appear. The fact that a general election is soon to take place has also prompted many to request at least a  delay on the rollout of these changes to ensure that nothing is rushed, and everything is implemented correctly.

CIPP comment

 The CIPP is offering both webinars and  half-day training courses surrounding the topic of IR35 / off-payroll working. It is essential for businesses to acquaint themselves with details and guidance surrounding the reforms rapidly approaching in April 2020 so that they are fully prepared when it does arrive.

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