HMRC confirms IR35 reforms will go ahead from 6 April 2020 in response to recent review

27 February 2020

HMRC has published the findings of the review it recently conducted into IR35 reforms in the private sector, giving concrete confirmation that the planned implementation date of 6 April 2020 remains unchanged.

The publication confirms several changes, made to address stakeholder concerns that were voiced over the course of the review, and to ensure smooth and successful implementation of the reforms:

  • In the first year, customers will not be required to pay penalties for errors that relate to off-payroll, with the exception of cases where there has been deliberate non-compliance
  • HMRC has confirmed its previous commitment that information resulting from changes to the rules will not be used in order to open new investigations into Personal Service Companies for tax years prior to 6 April 2020, unless there is sufficient reason to suspect criminal behaviour or fraud
  • HMRC has also reiterated its previous announcement that the rules will only be applicable to services carried out from 6 April 2020, and not to any payments made on or after 6 April 2020. Therefore, if, for example, services were provided on 30 March 2020 but not paid until 8 April 2020, the new rules would not apply. If the services were provided on 8 April 2020, then the new rules would apply
  • There will be a legal obligation for clients to respond to a request for information regarding their size from the agency or worker, and legislation will be updated to address concerns raised overrules as they apply to off-shore companies

There are already a range of educational documents available from HMRC, including comprehensive guidance on the reforms. There is also a factsheet to support contractors, and communications will be increased in the final weeks before the reforms are to be implemented. The government states that it will continue to listen to feedback from stakeholders and to evaluate and monitor the operation of the rules.

 


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