Advice to businesses is to continue preparing for IR35 reforms in April 2020

04 December 2019

As previously reported in the CIPP’s News Online, many of the political parties have pledged to review the proposed legislative changes to IR35 ahead of the general election. Experts have advised that, despite these pledges, organisations should continue their preparation for the IR35 reforms in line with previous expectations.

Matt Fryer, group compliance director at Brookson Legal, commented:

“Businesses would be foolish to halt their preparations now and a contractor workforce audit is still incredibly valuable.

 The latest announcements from Labour and the Conservatives only add to the uncertainty for contractors and businesses, many of whom have already invested considerably in preparation for April 2020. Clear communication is a priority for those who are likely to be most affected.”

People Management reported that Fryer also explained that he didn’t think the policy would be abandoned due to the fact that it is predicted that it would generate additional tax revenue of £1.3 billion.

The Liberal Democrats and the Scottish National Party explicitly referred to a reassessment of the new rules in their manifestos. Whilst both Labour and the Conservatives remained silent on the issue in their manifestos, they have both since confirmed that they will conduct a review of the rules should they be elected later this month.

The IR35 legislation that is being rolled out to the private sector in April 2020 means that as opposed to a contractor deciding whether they are classed as ‘inside IR35’ or not, the responsibility shifts to the end engager. This is true in any scenarios where the end engager is classed as being medium or large in size and not ‘small’. It is only in scenarios where the end engager is classified as ‘small’ that the decision remains with the contractor. If an intermediary or an agent within the supply chain is classed as ‘small’ but the end engager is not, then the new reforms would still apply.

This is confirmed in the guidance provided by HMRC:

“The conditions about size only apply to clients. If you are a small-sized fee-payer you will still be responsible for applying off-payroll working rules.”

CIPP comment

The CIPP is aware of the implications that the new IR35 reforms will have, both on contractors and their end engagers. As per the advice to proceed with preparing for the new legislation, to help individuals we are offering both a webinar and a half-day training course providing information on the topic. The next webinar is running on 8 January 2020 and the next available course is being held on 13 January 2020 in Bristol.

 


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